International Marketing Research and Consumer …jnujprdistance.com/assets/lms/LMS...

International Marketing Research and Consumer Behaviour

Board of Studies

Prof. H. N. Verma Prof. M. K. GhadoliyaVice- Chancellor Director, Jaipur National University, Jaipur School of Distance Education and Learning Jaipur National University, JaipurDr. Rajendra Takale Prof. and Head AcademicsSBPIM, Pune

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Subject Expert Panel

Dr. Chetan Choudhary Kartik BijapurkarDirector, SBS, Sinhgad Subject Matter ExpertPune

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Content Review Panel

Vijayalakshmi R.HSubject Matter Expert

___________________________________________________________________________________________Copyright ©

This book contains the course content for International Marketing Research and Consumer Behaviour.

First Edition 2013

Printed byUniversal Training Solutions Private Limited

Address05th Floor, I-Space, Bavdhan, Pune 411021.

All rights reserved. This book or any portion thereof may not, in any form or by any means including electronic or mechanical or photocopying or recording, be reproduced or distributed or transmitted or stored in a retrieval system or be broadcasted or transmitted.

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I

Index

ContentI. ...................................................................... II

List of FiguresII. ..........................................................VI

List of TablesIII. ......................................................... VII

AbbreviationsIV. ......................................................VIII

Case StudyV. ................................................................ 92

BibliographyVI. ........................................................... 97

Self Assessment AnswersVII. ................................... 100

Book at a Glance

II

Contents

Chapter I ....................................................................................................................................................... 1A Decision-Making Perspective on Marketing Research ........................................................................ 1Aim ................................................................................................................................................................ 1Objectives ...................................................................................................................................................... 1Learning outcome .......................................................................................................................................... 11.1 Introduction: A Decision-Making Perspective on Marketing Research .................................................. 21.2 Marketing Research ................................................................................................................................ 21.3 International Marketing Research ............................................................................................................ 31.4 Marketing Research in Practice ............................................................................................................... 3 1.4.1 Marketing Research in Practice ............................................................................................... 3 1.4.2 Programmatic Research .......................................................................................................... 3 1.4.3 Selective Research .................................................................................................................. 3 1.4.4 Evaluative Research ................................................................................................................ 41.5 The Marketing Research Process ............................................................................................................. 5 1.5.1 The Marketing Research Process ............................................................................................. 5 1.5.2 Research Design and Implementation ..................................................................................... 6 1.5.2.1 Marketing Research Design and Implementation ..................................................... 6 1.5.2.2 Exploratory Research ................................................................................................ 6 1.5.2.3 Descriptive Research ................................................................................................. 7 1.5.2.4 Causal Research ........................................................................................................ 7 1.5.2.5 Secondary Data ........................................................................................................ 7 1.5.2.6 Primary Data ............................................................................................................ 7Summary ....................................................................................................................................................... 9References ..................................................................................................................................................... 9Recommended Reading ............................................................................................................................... 9Self Assessment ........................................................................................................................................... 10

Chapter II ................................................................................................................................................... 12Secondary Sources of Marketing Data..................................................................................................... 12Aim .............................................................................................................................................................. 12Objectives .................................................................................................................................................... 12Learning outcome ........................................................................................................................................ 122.1 Introduction: Using Secondary Data Sources for Domestic Marketing Research ................................. 132.2 Using Secondary Data Sources for International Marketing Research ................................................. 142.3 Standardised Sources of Marketing Data ............................................................................................... 16 2.3.1 Standardised Sources of Marketing Data ............................................................................... 16 2.3.2 Marketing Research on the Internet Today ............................................................................ 172.4 Information Collection: Qualitative and Observational Methods .......................................................... 19 2.4.1 Using Qualitative Methods for Information Collection ......................................................... 19 2.4.2 Exploratory Focus Groups ..................................................................................................... 20 2.4.3 Clinical Focus Groups ........................................................................................................... 20 2.4.4 Experiencing Focus Groups ................................................................................................... 20Summary ..................................................................................................................................................... 21References ................................................................................................................................................... 21Recommended Reading ............................................................................................................................. 21Self Assessment ........................................................................................................................................... 22

Chapter III .................................................................................................................................................. 24Market Strategy and Analysis................................................................................................................... 24Aim .............................................................................................................................................................. 24Objectives .................................................................................................................................................... 24Learning outcome ........................................................................................................................................ 243.1 Market Analysis ..................................................................................................................................... 25

III

3.1.1 The Consumer ........................................................................................................................ 25 3.1.2 The External Analysis (Company) ......................................................................................... 25 3.1.3 The Competition .................................................................................................................... 26 3.1.4 The Conditions ....................................................................................................................... 26 3.1.5 Market Segmentation ............................................................................................................. 26 3.1.6 Need Set ................................................................................................................................. 26 3.1.7 Demographic and Psychographic Characteristics .................................................................. 26 3.1.8 Target Segment ...................................................................................................................... 263.2 Marketing Strategy ................................................................................................................................. 273.3 Service .................................................................................................................................................... 283.4 Consumer Decision Process ................................................................................................................... 28Summary .................................................................................................................................................... 30References ................................................................................................................................................... 30Recommended Reading ............................................................................................................................. 30Self Assessment ........................................................................................................................................... 31

Chapter IV .................................................................................................................................................. 33Market Research and Consumer Behaviour ........................................................................................... 33Aim .............................................................................................................................................................. 33Objectives .................................................................................................................................................... 33Learning outcome ........................................................................................................................................ 334.1 Introduction ............................................................................................................................................ 344.2 Relevance of Market Research with Consumer Behaviour ................................................................... 344.3 Approaches to Consumer Behaviour Research ...................................................................................... 35 4.3.1 Traditional Approach ............................................................................................................. 35 4.3.2 Current Approach: ‘Dialectical’ ............................................................................................. 374.4 Research Perspectives on Consumer Behaviour .................................................................................... 374.5 Research Paradigms in Consumer Behaviour ........................................................................................ 37 4.5.1 Quantitative Research in Consumer Behaviour ..................................................................... 38 4.5.2 Qualitative Research in Consumer Behaviour ....................................................................... 38Summary .................................................................................................................................................... 39References ................................................................................................................................................... 39Recommended Reading ............................................................................................................................. 39Self Assessment ........................................................................................................................................... 40

Chapter V .................................................................................................................................................... 42Attitude Measurement in Marketing Research ...................................................................................... 42Aim .............................................................................................................................................................. 42Objectives .................................................................................................................................................... 42Learning outcome ........................................................................................................................................ 425.1 Introduction: Attitude Measurement in Marketing Research ................................................................. 435.2 Designing a Marketing Research Questionnaire .................................................................................... 445.3 Experimentation ..................................................................................................................................... 46 5.3.1 Experimental Research .......................................................................................................... 46 5.3.2 Selection of the Response Variable ........................................................................................ 46 5.3.3 Performing the Experiment ................................................................................................... 47 5.3.4 Date Analysis ......................................................................................................................... 47 5.3.5 Conclusion and Recommendations ........................................................................................ 475.4 Sampling Fundamentals in Marketing Research ................................................................................... 48Summary ..................................................................................................................................................... 50References ................................................................................................................................................... 50Recommended Reading ............................................................................................................................. 50Self Assessment .......................................................................................................................................... 51

IV

Chapter VI .................................................................................................................................................. 53International Marketing Research: A Global Project Management Perspective ................................ 53Aim .............................................................................................................................................................. 53Objective ...................................................................................................................................................... 53Learning outcome ........................................................................................................................................ 536.1 Introduction ............................................................................................................................................ 546.2 Marketing Research goes Global ........................................................................................................... 546.3 The Importance of International Marketing Research ........................................................................... 556.4 Think Globally, Learn Locally ............................................................................................................... 566.5 The International Market Research Framework .................................................................................... 566.6 Setting Research Objectives .................................................................................................................. 576.7 Designing Research Methodology ......................................................................................................... 586.8 Collecting Data and Reporting Findings ................................................................................................ 586.9 Challenges of Conducting International Marketing Research ............................................................... 586.10 Cultural Challenges .............................................................................................................................. 596.11 Language .............................................................................................................................................. 596.12 Translation............................................................................................................................................ 59 6.12.1 Syntax .................................................................................................................................. 60 6.12.2 Cultural Norms .................................................................................................................... 60 6.12.3 Time Zones .......................................................................................................................... 60 6.12.4 Foreign Holidays .................................................................................................................. 60 6.12.5 Sampling Issues/Sampling Frame ........................................................................................ 61 6.12.6 Native Interviewers .............................................................................................................. 61 6.12.7 Questionnaire Length ........................................................................................................... 61 6.12.8 Incentives ............................................................................................................................. 61 6.12.9 Measurement Issues..............................................................................................................61 6.12.10 Market Research Infrastructure ......................................................................................... 62 6.12.11 Currency Fluctuations ........................................................................................................ 62 6.12.12 Data Collection Challenges ............................................................................................... 62 6.12.13 Legal Issues ........................................................................................................................ 626.13 Guidelines for Managers ...................................................................................................................... 62Summary ..................................................................................................................................................... 64References ................................................................................................................................................... 64Recommended Reading ............................................................................................................................. 64Self Assessment ........................................................................................................................................... 65

Chapter VII ................................................................................................................................................ 67Leadership and Professional Skills ........................................................................................................... 67Aim .............................................................................................................................................................. 67Objectives .................................................................................................................................................... 67Learning outcome ........................................................................................................................................ 677.1 Introduction: Management Attitudes ..................................................................................................... 687.2 Skills and Knowledge ............................................................................................................................ 70 7.2.1 Skills ...................................................................................................................................... 72 7.2.2 Attitudes ................................................................................................................................. 72 7.2.3 Leadership Qualities .............................................................................................................. 72 7.2.4 Management Skills ................................................................................................................ 72 7.2.5 Reflexive Abilities ................................................................................................................. 73 7.2.6 Systemic Thinking ................................................................................................................. 73 7.2.7 Embracing Diversity and Managing Risk .............................................................................. 73 7.2.8 Balancing Local and Global Perspectives ............................................................................. 74 7.2.9 Meaningful Dialogue and Language ...................................................................................... 75 7.2.10 Emotional Awareness ........................................................................................................... 767.3 The Corporate Response ........................................................................................................................ 777.4 Attributes of Responsible Leadership Integrity ..................................................................................... 79

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7.4.1 Open-Mindedness .................................................................................................................. 797.4.2 Taking a Long-term Perspective ......................................................................................................... 797.4.3 Demonstrating Ethical Behaviour ....................................................................................................... 797.4.4 Care for People ................................................................................................................................... 797.4.5 Communications ................................................................................................................................. 797.4.6 Managing Responsibly Outside the Organisation ............................................................................... 79Summary ..................................................................................................................................................... 80References ................................................................................................................................................... 80Recommended Reading ............................................................................................................................. 81Self Assessment ........................................................................................................................................... 82

Chapter VIII ............................................................................................................................................... 84Consumer Behaviour Theory: Approaches and Models ........................................................................ 84Aim .............................................................................................................................................................. 84Objectives .................................................................................................................................................... 84Learning outcome ........................................................................................................................................ 848.1 Consumer Behaviour and Consumer Decision Making ......................................................................... 858.2 Theoretical Approaches to the Study of Consumer Behaviour .............................................................. 85 8.2.1 Economic Man ....................................................................................................................... 85 8.2.2 Psychodynamic Approach ...................................................................................................... 86 8.2.3 Behaviourist Approach .......................................................................................................... 86 8.2.4 Cognitive Approach ............................................................................................................... 868.3 Cognitive Models of Consumer Behaviour ........................................................................................... 88Summary .................................................................................................................................................... 89References ................................................................................................................................................... 89Recommended Reading ............................................................................................................................. 89Self Assessment ........................................................................................................................................... 90

VI

List of Figures

Fig. 3.1 Characteristic features of Indian consumer .................................................................................... 26Fig. 3.2 Decision-making process generally followed by consumers ......................................................... 27Fig. 3.3 Decision process ............................................................................................................................. 28Fig. 3.4 Creating satisfied customers ........................................................................................................... 29Fig. 4.1 Relevance of market research with consumer behaviour ............................................................... 34Fig. 4.2 Approaches to consumer behaviour research ................................................................................. 35Fig. 6.1 Information Feedback Loop ........................................................................................................... 57Fig. 8.1 Stimulus-organism-response model of decision making ................................................................ 87Fig. 8.2 Cognitive consumer behaviour models .......................................................................................... 88

VII

List of Tables

Table 3.1 Consumer behaviour roles ........................................................................................................... 25Table 3.2 Criterions for marking attractiveness of the segment .................................................................. 27Table 4.1 Relationship between marketing research and consumer research .............................................. 35Table 4.2 The positivist and interpretive approach ...................................................................................... 36Table 4.3 Current approaches....................................................................................................................... 37Table 4.4 Research perspectives on consumer behaviour ............................................................................ 37

VIII

Abbreviations

CASRO - The Council of American Research Organisation

EC - European Community

NAFTA - North American Free Trade Agreement

MDSS - Marketing Decision Support System

SRC - Self Reference Criterion

NTI - Nielsen Television Index

AID - Arbitron Information on Demand

EABIS - European Academy of Business in Society

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Chapter I

A Decision-Making Perspective on Marketing Research

Aim

The aim of this chapter is to:

explain the concept of decision making•

explicate international marketing research•

explore the exploratory research•

Objectives

The objective of this chapter is to:

definemarketresearchinpractice•

enlist selective research•

explicate evaluative research•

Learning outcome

At the end of this chapter, you will be able to:

recognise market research types•

understand marketing design•

understand marketing implementation•


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1.1 Introduction: A Decision-Making Perspective on Marketing ResearchMarketingresearchisnotanimmediateoranobviouspathtofindingsolutionstoallmanagerialProblems.Marketingis the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organisation objectives.

Themarketingconceptrequiresthatcustomersatisfactionratherthanprofitmaximisationisthegoalofanorganisation.In other words, the organisation should be consumer oriented and should try to understand consumers’ requirements andsatisfythemquicklyandefficiently,inwaysthatarebeneficialtoboththeconsumerandtheorganisation.Thismeans that any research organisation should try to obtain information on consumer needs and gather marketing intelligencetohelpsatisfytheseneedsefficiently.

1.2 Marketing Research Marketing Research is a critical part of such a marketing intelligence system; it helps to improve management decision making by providing relevant, accurate, and timely (RAT) information. Every decision poses unique needs for information, and relevant strategies can be developed based on the information gathered through marketing research in action. Too often, marketing research is considered narrowly as the gathering and analysing of data for someone else to use. Firms can achieve and sustain a competitive advantage through the creative use of market information.Hence,marketingresearchisdefinedasinformationinputtodecisions,notsimplytheevaluationofdecisions that have been made.

Market research alone, however, does not guarantee success; the intelligent use of market research is the key to business achievement. A competitive edge is more the result of how information is used than of who does or does not have the information. Marketing decisions involve issues that range from fundamental shifts in the positioning of a business or the decision to enter a new market to narrow tactical questions of how best to stock a grocery shelf. The context for these decisions is the market planning process, which proceeds sequentially through four stages; situation analysis, strategy development, marketing program development, and implementation. This is a never-ending process, so the evaluation of past strategic decisions serves as an input to the situation assessment.

During each stage, marketing research makes a major contribution to clarifying and resolving issues and then choosingamongdecisionalternatives.Marketingresearchisnotanimmediateoranobviouspathtofindingsolutionsto all managerial problems. A manager who is faced with a particular problem should not instinctively resort to conductingamarketingresearchtofindasolutiontotheproblem.Amanagershouldconsiderseveralfactorsbeforeordering marketing research. Sometimes it is best not to conduct marketing research. Hence, the primary decision tobemadeiswhetherornotmarketresearchiscalledforinaparticularsituation.Factorsthatinfluencethisinitialdecision include the following:

Relevance•Type and Nature of Information Sought•Timing•Availability of Resources•Cost-BenefitAnalysis•

Although research is conducted to generate information, managers do not readily use the information to solve their problems.The factors that influenceamanager’sdecision touse research informationare (1) researchquality,(2)conformitytopriorexpectations,(3)clarityofpresentation,(4)politicalacceptabilitywithinthefirm,and(5)challenge to the status quo. Researchers and managers agree that the technical quality of research is the primary determination of research use. Also, managers are less inclined to utilise research that does not conform to prior notions or is not politically acceptable. Some researchers argue that the use of information is a function of the direct and indirect effects of environmental, organisational, informational, and individual factors. However, a researcher shouldnotalterthefindingstomatchamanager’spriornotions.Further,managersinconsumerorganisationsarelesslikelytouseresearchfindingsthantheircounterpartsinindustrialfirms.

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This is due to a greater exploratory objective in information collection, a greater degree of formalisation of organisational structure, and a lesser degree of surprise in the information collection. Ethics refers to moral principles or values that generally govern the conduct of an individual or group. Researchers have responsibilities to their profession, clients, and respondents, and must adhere to high ethical standards to ensure that both the function and the information are not brought into disrepute. The Marketing Research Association, Inc. (Chicago, Illinois) has instituted a code of ethics that serves as a guideline for marketing ethical decisions .The Council of American Survey Research Organisation (CASRO) has also established a detailed code of marketing research ethics to which its members adhere. Normally, three parties are involved in a marketing research project:

the client, who sponsors the project,•the supplier who designs and executes the research, and •the respondent who provides the information.•

The issue of ethics in marketing research involves all three players in a research project. The increase in international trade and the emergence of global corporations resulting from increased globalisation of business have had a major impact on all facets of business, including marketing research. The increase in global competition, coupled with the formation of regional trading blocs such as the European Community (EC) and the North American Free Trade Agreement (NAFTA), have spurred the growth of global corporations and the need for international marketing research. The needs to collect information relating to international markets, and to monitor trends in these markets, as well as to conduct research to determine the appropriate strategies that will be most effective in international markets, are expanding rapidly. The marketing research industry in the United States is increasingly growing into an international industry, with more than one-third of its revenues coming from foreign operations. The increase in the importance of global business has caused an increase in awareness of the problems related to international research.

1.3 International Marketing ResearchInternational marketing research canbedefinedasmarketingresearchconductedeithersimultaneouslyorsequentiallyto facilitate marketing decisions in more than one country. As such, the basic functions of marketing research and the research process do not differ from domestic and multicounty research; however, the international marketing research process is much more complicated and the international marketing researcher faces problems that are different fromthoseofadomesticresearcher.Thetaskofmarketingresearchistofindasizablesegmentwithhomogenoustastes.ThegrowingpresenceofaninternationalmarketintheUnitedStateshasbeeninfluencedbybothdomesticand foreign markets. In the domestic arena, ethnic groups range from Chinese to Turkish, each lending a piece of its culture to the U.S. market. Within each ethnic group, the product preference is diverse. These facts present a challengetomarketingresearchtofindahomogenousgroupamongthe“meltingpot”ofinternationalproducts.Complicating matters is the rise in foreign manufacturers selling their goods in the United States.

1.4 Marketing Research in PracticeFollowing are the practices in marketing research:1.4.1 Marketing Research in Practice“Withmarketing the newpriority,marketing research is the rallying cry.” In practice, amarketing researchdepartment’s goal can be grouped into three major categories: programmatic, selective, or evaluative.

1.4.2 Programmatic Research Programmatic research is performed to develop marketing options through market segmentation, market opportunity analysis, or consumer attitude and product usage studies. 1.4.3 Selective Research Selective research is done to test different decision alternatives such as new product concept testing, advertising copy testing, pretest marketing, and test marketing.


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1.4.4 Evaluative Research Evaluative research is carried out to evaluate performance of programs, including tracking advertising recall, corporate and brand image studies, and measuring customer satisfaction with the quality of the product and service. As the number of products and types of services introduced into the market increase, the need for marketing research explodes and the future of marketing research appears to be both promising and challenging. With marketing the new priority, marketing research is the rallying cry.

Companiesaretryingfranticallytogettheirhandsoninformationthatidentifiesandexplainstheneedsofpowerfulnew consumer segments now being formed. Some companies are pinning their futures on product innovations, others are rejuvenating time-worn but proven brands, and still others are doing both. Not only are the companies that always did marketing research doing a great deal more, the breadth of research activities also continues to expand. Senior management is looking for more support for its decisions; therefore, researchers are doing more acquisition and competitor studies, segmentation and market structure analyses, and basic strategic position assessments. Other functions, such as the legal department, now use marketing research evidence routinely. Corporate Affairs wants to know shareholders’, bankers’, analysts’, and employees’ attitudes toward the company. The service department continuously audits service delivery capability and customer satisfaction. Entire industries that used to be protected from the vagaries of competition and changing customer needs by regulatory statutes are learning to cope with a deregulatedenvironment.Airlines,banks,andfinancialservicesgroupsarelookingforwaystoovercomeproductproliferation, advertising clutter, and high marketing costs brought on by more sophisticated customers and aggressive competitors.

An information system (IS) is a continuing and interacting structure of people, equipment, and procedures designed to gather, sort, analyse, evaluate, and distribute pertinent, timely, and accurate information to decision makers. While marketing research is concerned mainly with the actual content of the information and how it is to be generated, the informationsystemisconcernedwithmanagingtheflowofdatafrommanydifferentprojectsandsecondarysourcesto the managers who will use it. This requires databases to organise and store the information and a decision support system (DSS) to retrieve date, transform it into usable information, and disseminate it to users. Managers don’t want data. They want, and need, decision-relevant information in accessible and preferably graphical form for:

routine comparisons of current performance against past trends on each of the key measures of effectiveness,•periodic exception reports to assess which sales territories or accounts have not matched previous years’ •purchases, and special analyses to evaluate the sales impact of particular marketing programs, and to predict what would happen •if changes were made.

In addition, different divisions would like to be linked to enable product managers, sales planners, market researchers, financialanalysts,andproductionschedulerstoshareinformation.Thepurposeofamarketingdecisionsupportsystem (MDSS) is to combine marketing data from diverse sources into a single database which line managers can enter interactively to quickly identify problems and obtain standard, periodic reports, as well as answers to analytical questions. A good MDSS should have the following characteristics.

Interactive: The process of interaction with the MDSS should be simple and direct. With just a few commands the •user should be able to obtain the results immediately. There should be no need for a programmer in between.Flexible:AgoodMDSSshouldbeflexible.Itshouldbeabletopresenttheavailabledataineitherdiscrete•or aggregate form. It should satisfy the information needs of the managers in different hierarchical levels and functions.Discovery oriented: The MDSS should not only assist managers in solving the existing problems but should •also help them to probe for trends and ask new questions. The managers should be able to discover new patterns and be able to act on them using MDSS.User friendly: The MDSS should be user friendly. It should be easy for the managers to learn and use the system. •Itshouldnottakehoursjusttofigureoutwhatisgoingon.MostMDSSpackagesaremenudrivenandareeasyto operate. A typical MDSS is assembled from four components.

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Database �Reports and Displays �Analysis Capabilities �Models �

1.5 The Marketing Research ProcessThe following are the fundamentals of marketing research process:1.5.1 The Marketing Research ProcessThe research process provides a systematic, planned approach to the research project and ensures that all aspects of the research project are consistent with each other. How is the market research project conceived, planned, and executed? The answer, in part, is through a research process, consisting of stages or steps that guide the project from itsconceptionthroughthefinalanalysis,recommendation,andultimateaction.Theresearchprocessprovidesasystematic, planned approach to the research project and ensures that all aspects of the research project are consistent with each other.

It is especially important that the research design and implementation be consistent with the research purpose and objectives. Otherwise, the results will not help the client. Research studies evolve through a series of steps, each representing the answer to a key question. Why should we do research? This establishes the research purpose as seen by the management team that will be using the results. This step requires understanding the decisions to be made and the problems or opportunities to be diagnosed.

What research should be done? Here the management purpose is translated into objectives that tell the researchers exactly what questions need to be answered by the research study or project. Is it worth doing the research? The decision has to be made here about whether the value of the information that will likely be obtained is going to be greater than the cost of collecting it. How should the research be designed to achieve the research objectives? Design issues include the choice of research approach reliance on secondary data versus conducting a survey or experiment andthespecificsofhowtocollectthedata.Whatwillwedowiththeresearch?Oncethedatahavebeencollected,how will it be analysed, interpreted, and used to make recommendations for action?

The necessary steps are linked in a sequential process. Although the steps usually occur in this general order, we mustemphasisethat“early”decisionsarealwaysmadebylookingaheadto“later”decisions.Theearlydecisionsareconstantlybeingmodifiedtoaccountfornewinsightsandpossibilitiespresentedbylaterdecisions.Also,thesteps do not function in isolation. Rather, they are embedded in the ongoing planning process of the business, which culminates in the development of strategies, programs, and action. This planning process provides the purposes of the research. In turn, planning is supported by the information system, which (1) anticipates the type of information required by decision makers and (2) organised data that have been collected to ensure their availability when needed. The development of a research purpose that links the research to decision making, and the formulation of research objectives that serve to guide the research are unquestionably the most important steps in the research process. If they are correct, the research stands a good chance of being both useful and appropriate.

If they are bypassed or wrong, the research almost surely will be wasteful and irrelevant. The basic functions of marketing research and the various stages in the research process do not differ between domestic and international research. The international marketing research (IMR) process, however, is much more complicated than the domestic research process. IMR is more complicated because of the necessity to ensure construct, measurement, sampling and analysis equivalence before any cross-cultural study is conducted. A thorough research of the proposed international market is very important before launching a new product or service. Although it is complex, it can be an extremely beneficialprocess.Toavoidhigh-profilemistakesininternationalmarketingresearch,therearesomeconsiderationsto be made:Profileyourtargetcustomersandclients.

Interview target segments to assess how well they match your preconceived ideas.•Hire local researchers who know the costs and methods that are workable in local markets.•


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Use a variety of methods to get a well-rounded picture of these proposed markets, the best approach being a •combination of qualitative and quantitative methods that provides picture references, strengths, beliefs, and anecdotes.

Lookat thefindingsandanalysewhatmustbedonedifferently, abroador internationally, in comparisonwithcurrent domestic marketing activities. Thus, while conducting IMR, one should be aware of the complicated cultural differences in differing regions of the world. This complication stems from operating in different and diverse environmental contexts, ranging from the technologically advanced and stable United States to mature Western European markets, to the fast-changing environments in newly industrialised countries such as Hong Kong and SouthKorea,todevelopingeconomiessuchasIndiaandBrazil, totransformingeconomiessuchastheformerSoviet Union and Eastern Europe, and to less developed countries on the African continent.

Problems may not always be couched in the same terms in different countries or cultural contexts. This may be due to differences in socioeconomic conditions, levels of economic development, or differences in any of the macroenvironmentalfactors.Severalacademicscholarshaveidentifiedandhavepointedout themajorreasonfor the failure of businesses and marketing research projects in a foreign environment. The result has been the self-referencecriterion(SRC)adoptedbyresearchersindefiningtheprobleminaforeigncountry.SRCassumesthat the environmental variables (cultural and others) that are prevalent in the researcher’s domestic market are alsoapplicabletotheforeigncountry.Thisisamajorcauseforthefailureofresearchprojects,sincedefiningtheproblems is the most crucial step in the marketing research process.

One of the most frequent objectives of international marketing research is foreign market opportunity analysis. Whenafirmlaunchesinternationalactivities,informationcanbeaccumulatedtoprovidebasicguidelines.Theaimis not to conduct a painstaking and detailed analysis of the world, but to gather information on questions that will help management narrow the possibilities for international marketing activities. Possible questions an international marketing researcher might ask to achieve this objective include:Do opportunities exist in foreign markets for the firm’sproductsandservices?Whichforeignmarketswarrantdetailedinvestigation?Whatarethemajoreconomic,political, legal, and other environmental facts and trends in each of the potential countries? What mode of entry does the company plan to adopt to enter the foreign market? What is the market potential in these countries? Who arethefirm’spresentandpotentialcustomersabroad?Whatisthenatureofcompetitionintheforeignmarkets?Whatkindofmarketingstrategyshouldthefirmadopt?

1.5.2 Research Design and ImplementationThe following explain the research design and implementation:1.5.2.1 Marketing Research Design and ImplementationThe usefulness of a research project depends on the overall quality of the research design and on the data collected and analysed based on the design. A research design is the detailed blueprint used to guide a research study toward itsobjectives.Theprocessofdesigningaresearchstudyinvolvesmanyinterrelateddecisions.Themostsignificantdecision is the choice of research approach, because it determines how the information will be obtained. Typical questions at this stage are: Should we rely on secondary sources such as the Census? Which is more appropriate, an exploratory approach with group discussions or a survey? Is a mail, telephone, fax, or personal interview survey betterforthisproblem?Allresearchapproachescanbeclassifiedintooneofthreegeneralcategoriesofresearch:exploratory,descriptive,andcausal.Thesecategoriesdiffersignificantlyintermsofresearchpurpose,researchquestions, the precision of the hypotheses that are formed, and the data collection methods that are used.

1.5.2.2 Exploratory ResearchExploratory research is used when one is seeking insights into the general nature of a problem, the possible decision alternatives, and relevant variables that need to be considered. Typically, there is little prior knowledge on which tobuild.Theresearchmethodsarehighlyflexible,unstructured,andqualitative,fortheresearcherbeginswithoutfirmpreconceptionsastowhatwillbefound.Theabsenceofstructurepermitsathoroughpursuitofinterestingideas and clues about the problem situation.

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1.5.2.3 Descriptive ResearchDescriptive research embraces a large proportion of marketing research. The purpose is to provide an accurate snapshot of some aspect of the market environment.

1.5.2.4 Causal ResearchWhen it is necessary to show that one variable causes or determines the values of other variables, a causal research approachmustbeused.Descriptiveresearchisnotsufficient,forallitcanshowisthattwovariablesarerelatedor associated. Of course, evidence of a relationship or an association is useful; otherwise, we would have no basis for even inferring that causality might be present. To go beyond this inference we must have reasonable proof that one variable preceded the other and that there were no other causal factors that could have accounted for the relationship. The research designer has a wide variety of methods to consider, either singly or in combination. They canbegroupedfirstaccordingtowhethertheyusesecondaryorprimarysourcesofdata.

1.5.2.5 Secondary Data Secondary Data are already available, because they were collected for some purpose other than solving the present problem. Included here are (1) the existing company information system; (2) databanks of other organisations, including government sources such as the Census Bureau or trade association studies and reports; and (3) syndicated data sources, such as consumer purchase panels, where one organisation collects reasonable standardised data for use by client companies.

1.5.2.6 Primary Data Primarydataarecollectedespeciallytoaddressaspecificresearchobjective.Avarietyofmethods,rangingfromqualitative research to surveys to experiments, may be employed . Some methods are better suited to one category of research than another. Once the research approach has been chosen, research tactics and implementation follow: thespecificsofthemeasurements,theplanforchoosingthesample,andthemethodsofanalysesmustbedeveloped.Thefirst step is translate the researchobjective into informationrequirementsand then intoquestions thatcanbe answered by anticipated respondents .There are many ways to ask questions to obtain this kind of attitudinal information. Once the individual questions have been decided, the measuring instrument has to be developed. Usually this instrument is a questionnaire, but it also may be a plan for observing behavior or recording data. The researcher designing an effective questionnaire must be concerned with how questions on sensitive topics such as income can be asked, what the order of the questions should be, and how misinterpretations can be avoided.

Most marketing research studies are limited to a sample or subgroup of the total population relevant to the research question, rather than a census of the entire group. The sampling plan describes how the subgroup is to be selected. One approach is to use probability sampling, in which all population members have a known probability of being in the sample. This choice is indicated whenever it is important to be able to show how representative the sample is of the population.

Othercriticaldecisionsatthisstagearethesizeofthesample,asthishasdirectimplicationsfortheprojectbudget,and the means of minimising the effect on the results of sample members who cannot be reached or who refuse to cooperate. At this stage of the design, most of the cost has yet to be expended, but the research is now completely specifiedandareliablecostestimateshouldbeavailable.Thus,amoredetailedcostbenefitanalysisshouldbepossible to determine if the research should be conducted as designed or if it should be conducted at all.

The usefulness of a research project depends on the overall quality of the research design and on the data collected and analysed based on the design. Several potential sources of error can affect the quality of the research process. Theerrorscan influence thevariousstagesof the researchprocessand result in inaccurateoruseless researchfindings.Twocommonapproachestobudgetingforamarketingresearchprojectareestimatingthedollarcostsassociated with each research activity or determining the activities to be performed, in hours, and then applying standard cost estimates to these hours. The former approach typically is used when a marketing research project is relatively unusual or expensive.


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The latter approach is used for routine marketing research projects or when the researcher has considerable knowledge of research activity costs. Regardless of the basic research design selected (exploratory, descriptive, or causal), researchers need to be familiar with and experienced in handling several issues or problems unique to the conduct of marketing research within and across countries and cultural groups.

Three issues critical to international research design are (1) determining information requirements, (2) determining the unit of analysis, and (3) achieving equivalence of construct, measurement, sample and analysis. Apart from these issues, other aspects of the research process, such as identifying sources of data, availability, and comparability of data from different countries, problems associated with primary data collection across countries, and so forth, add to the complexity of the international research process. Also, these issues add to the nonrandom error component of the research process.

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SummaryMarketingresearchisnotanimmediateoranobviouspathtofindingsolutionstoallmanagerialproblems.•Themarketingconceptrequires thatcustomersatisfactionrather thanprofitmaximisation• is the goal of an organisation.Marketing decisions involve issues that range from fundamental shifts in the positioning of a business or the •decision to enter a new market to narrow tactical questions of how best to stock a grocery shelf.Programmatic research• is performed to develop marketing options through market segmentation, market opportunity analysis, or consumer attitude and product usage studies. Selective research• is done to test different decision alternatives such as new product concept testing, advertising copy testing, pretest marketing, and test marketing. The need to collect information relating to international markets, and to monitor trends in these markets, as •well as to conduct research to determine the appropriate strategies that will be most effective in international markets, are expanding rapidly.Descriptiveresearchisnotsufficient,forallitcanshowisthattwovariablesarerelatedorassociated.•The purpose of a marketing decision support system (MDSS) is to combine marketing data from diverse sources •into a single database which line managers can enter interactively to quickly identify problems and obtain standard, periodic reports, as well as answers to analytical questions.

ReferencesWrenn, W. B., Sherwood, P. & Ruddick, M., 2005. • The Marketing Research Guide, 2nd ed., Routledge.Wiid, J. & Diggines, C., 2010. • Marketing Research, 1st ed., Juta and Company Ltd. Mack, R., • A Decision-Making Perspective on Marketing Research, [pdf] Available at: <http://sb.cofc.edu/pv_obj_cache/pv_obj_id_F578CEE649B0AFAE2494C0409BC0AD67976C0000/filename/mbad522.pdf>[Accessed 7 November 2012].Schultz,R.L.,• A Decision- Making Perspective on Marketing Research, [pdf] Available at: <http://www.theproduct.com/faculty/papers/reality.pdf>[Accessed7November2012].Jesseni, K., • A Decision-Making Perspective on Marketing Research, [Video Online] Available at: <https://www.youtube.com/watch?v=q-xZ3eAN0PQ&feature=related>[Accessed7November2012].Bailey, L., • A Decision-Making Perspective on Marketing Research, [Video Online] Available at :< https://www.youtube.com/watch?v=WdQREwSRu7g&feature=related>[Accessed7November2012].

Recommended ReadingAaker, D. A., Kumar, V. & Day, G.S., 2008. • Marketing Research, 9th ed., John Wiley & Sons.Crisp, R. D., 1957. • Marketing Research, 1st ed., Tata McGraw-Hill Education.Blythe. J. & Zimmerman, A. S., 2005. • Business-to-business Marketing Management: A Global Perspective, 2nd ed., Cengage Learning EMEA.


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Self Assessment Which of the following is a process of planning and executing the conception, pricing, promotion, and distribution 1. of ideas, goods, and services to create exchanges that satisfy individual and organisation objectives?

Businessa. Marketingb. Salesc. E-commerced.

Market planning process proceeds sequentially through ________ stages.2. twoa. threeb. fourc. fived.

___________canbedefinedasmarketingresearchconductedeithersimultaneouslyorsequentiallytofacilitate3. marketing decisions in more than one country.

Intermediate Business Strategya. International marketing researchb. Intermediate marketing researchc. International Business Strategyd.

A _________ should consider several factors before ordering marketing research.4. marketing heada. managerb. operations headc. order managementd.

Thetaskofmarketingresearchistofindasizablesegmentwith_________tastes.5. heterogeneousa. homogeneousb. ignitiousc. sectord.

________ refers to moral principles or values that generally govern the conduct of an individual or group.6. Morala. Ethicsb. Businessc. Marketingd.

A good MDSS should be _________.7. lineara. non-linearb. flexiblec. saturatedd.

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__________ research8. is done to test different decision alternatives.Selectivea. Programmaticb. Recursivec. Optionald.

___________ research9. is performed to develop marketing options.Selectivea. Programmaticb. Recursivec. Optionald.

________________ research10. is carried out to evaluate performance of programs.Selectivea. Programmaticb. Evaluativec. Optionald.


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Chapter II

Secondary Sources of Marketing Data

Aim


explicate the concept of domestic marketing research•

explain how to use secondary sources for international marketing research •

explore the standardised sources of marketing data•

Objectives


definemarketingresearchoninternet•

enlist secondary sources•

explicate domestic research•

Learning outcome


identify internet and market research today •

understand secondary sources•

understand standardised sources•

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2.1 Introduction: Using Secondary Data Sources for Domestic Marketing ResearchSecondary data can be used by researchers in many ways. Secondary data are data that were collected by persons or agencies for purposes other than solving the problem at hand. They are one of the cheapest and easiest means ofaccesstoinformation.Hence,thefirstthingaresearchershoulddoissearchforsecondarydataavailableonthetopic. The amount of secondary data available is overwhelming, and researchers have to locate and utilise the data that are relevant to their research. Most search procedures follow a distinctive pattern, which begins with the most available and least costly sources .Almost all information systems initially are based on routinely collected internal data, and expand through the inclusion of data from published and standardised sources.

Secondary data can be used by researchers in many ways.•Secondary data may actually provide enough information to resolve the problem being investigated.•Secondary data can be a valuable source of new ideas that can be explored later through primary research.•

Examiningavailablesecondarydataisaprerequisitetocollectingprimarydata.Ithelpstodefinetheproblemandformulate hypotheses about its solution. Secondary data is of use in the collection of primary data. Examining the methodology and techniques employed by other investigators in similar studies may be useful in planning the presentone.Secondarydataalsohelpstodefinethepopulation,selectthesampleinprimaryinformationcollection,anddefinetheparametersofprimaryresearch.Secondarydatacanalsoserveasareferencebaseagainstwhichtocomparethevalidityoraccuracyofprimarydata.Itmayalsobeofvalueinestablishingclassificationsthatarecompatible with past studies so that trends may be more readily analysed.

Themostsignificantbenefitssecondarydataofferaresearcheraresavingsincostandtime.Secondarydataresearchinvolves just spending a few days in the library extracting the data and reporting them. This should involve very little time, effort, and money compared to primary research. Even if the data are bought from another source, it will turn out to be cheaper than collecting primary data, because the cost of data collection is shared by all those using the data. A company’s internal records, accounting and control systems, provide the most basic data on marketing inputs and the resulting outcomes.

The principal virtues of these data are ready availability, reasonable accessibility on a continuing basis, and relevance to the organisation’s situation. Data on inputs marketing effort expended can range from budgets and schedules of expenditures to sales people’s call reports describing the number of calls per day, who was visited, problems and applications discussed, and the results of the visit. Extensive data on outcomes can be obtained from the billing records on shipments maintained in the accounting system. In many industries the resulting sales reports are the single most important items of data used by marketing managers, because they can be related (via exception reporting methods) to plans and budgets to determine whether performance is meeting expectations.

Also,theymaybecomparedwithcostsinordertoassessprofitability.Publisheddataarebyfarthemostpopularsourceofmarketinginformation.Notonlyarethedatareadilyavailable,oftentheyaresufficienttoanswertheresearch question. The major published sources are the various government publications (federal, state, provincial, and local), periodicals and journals, and publicly available reports from such private groups as foundations, publishers, trade associations, unions, and companies. Of all these sources, the most valuable data for the marketing researcher come from government census information and various registration requirements. The latter encompass births, deaths, marriages, income tax returns, unemployment records, export declarations, automobile registrations, and so on. How should someone who is unfamiliar with a market or research topic proceed?

Ingeneral,twobasicrulesaresuggestedtoguidethesearcheffort:(1)Startwiththegeneralandgotothespecific,and (2) make use of all available expertise. The four main categories are authorities, general guides and indices, compilations, and directories. Users of secondary sources rapidly develop a healthy skepticism. Unfortunately, there are many reasons why a forecast, historical statistic, or estimate may be found to be irrelevant or too inaccurate to be useful. Before such a judgment can be made, the researcher should have answers to the following questions: Who? This question applies especially to the reputation of the collecting agency for honest and thorough work and thecharacterofthesponsoringorganisation,whichmayinfluencetheinterpretationandreportingofthedata.Arelated question is whether either organisation has adequate resources to do a proper job. The problems do not end here, for the original data source (which provided the count, estimate, or other basis for the reported result may have its own motives for biasing what it reports. Why? Data that are collected to further the interests of a particular


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group are especially suspect. Media buyers, for example, soon learn to be wary of studies of media. It is easy to choose unconsciously those methods, questions, analysis procedures, and so forth, that favors the interests of the study sponsor, and it is unlikely that unfavorable results will be exposed to the public.

How? It is possible to appraise the quality of secondary data without knowledge of the methodology used to collect them. Therefore, one should immediately be suspicious of any source that does not describe the procedures used—includingacopyofthequestionnaire(ifany),thenatureandsizeofthesample,theresponserate,theresultsoffieldvalidationefforts,andanyotherproceduraldecisionsthatcouldinfluencetheresults.Thecrucialquestionis whether any of these decisions could bias the results systematically. What? Even if the available data are of acceptablequality,theymayprovedifficulttouseorinadequatetotheneed.Oneirritatingandprevalentproblemistheclassificationsthatareused.Widevariationsingeographic,age,andincomegroupingsacrossstudiesarecommon. When? There is nothing less interesting than last week’s newspaper.

Sooner or later, the pace of change in the world in general, and in markets in particular, renders all secondary data equally obsolete and uninteresting except to the historian. The rate of obsolescence varies with the type of data, but in all cases the researcher should know when the data were collected. There may be a substantial lag between the time of collection and the publication of the results. Consistency? With all the possible pitfalls in secondary data, andthedifficultyinidentifyingthemfully,thebestdefenseistofindanothersourcethatcanbeusedasabasisforcomparison. Ideally, the two sources should use different methodologies to arrive at the same kind of data. In the likelyeventthatthereissomedisagreementbetweenthetwosetsofdata,theprocessofreconciliationshouldfirstidentify the respective biases in order to narrow the differences and determine which set is the most credible.

2.2 Using Secondary Data Sources for International Marketing ResearchTwo major problems are associated with secondary data in international marketing research: the accuracy of the data and the comparability of data obtained from different countries. Secondary data are a key source of information for conducting international marketing research. This is in part due to their ready availability, the high cost of collecting primary data versus the relatively low cost of secondary data, and the usefulness of secondary data in assessing whetherspecificproblemsneedtobeinvestigated,andifso,how.Further,secondarydatasourcesareparticularlyvaluable in assessing opportunities in countries with which management has little familiarity, and in product markets at an early stage of market development. A wide variety of secondary data sources are available for international marketing research. These range from sources that provide general economic, social, and demographic data for almostallcountriesintheworld,tosourcesthatfocusonspecificindustriesworldwide.

A host of sources of macroeconomic data are to be found, ranging widely in the number of countries or regions covered. Many of these are based on or derived from United Nations and World Bank data. The Business International, Euromonitor, and Worldcasts divisions of Predicasts also publish annual information on macroeconomic variables. The preceding macroeconomic data sources, with the exception of Euromonitor, relate to the general business environment.They therefore do not providemuch indication as tomarket potential for specific industries.Anumberofsourcesofindustryspecificdataareavailable.TheyareUnitedNationsYearbooks,publicationsoftheU.S.DepartmentofCommerce,TheEconomist,andtheWorldcasts.Numerousothersourcesspecifictoindividualcountries or product markets are also to be found.

The U.S. Department of Commerce, for example, publishes International Marketing Handbook, which provides profiles and special information about doingbusiness in various countries. Information regarding regulations,customs, distribution channels, transportation, advertising and marketing research, credit, taxation, guidance for businesstravelersabroad,andsoforth,arecompiledintheir“OverseasBusinessReports.”Governmentsorotherbodies frequently publish national yearbooks or statistical data books. Various private sources also publish regional and country handbooks.

Two major problems are associated with secondary data in international marketing research: the accuracy of the data and the comparability of data obtained from different countries. Different sources often report different values for the same macroeconomic factor, such as gross national product, per-capita income, or the number of television setsinuse.Thiscastssomedoubtontheaccuracyofthedata.Thismaybeduetodifferentdefinitionsfollowedfor

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each of those statistics in different countries. The accuracy of data also varies from one country to another. Data from highly industrialised nations are likely to have a higher level of accuracy than data from developing countries, because of the difference in the sophistication of the procedures adopted.

The level of literacy in a country also plays a role in the accuracy of the macroeconomic data collected in that country. Business statistics and income data vary from country to country because different countries have different tax structures and different levels of taxation. Hence, it may not be useful to compare these statistics across countries. Population censuses may not only be inaccurate, they also may vary in frequency and the year in which they were collected. Although in United States they are collected once every 10 years, in Bolivia there was a 25-year gap betweentwocensuses.Somostpopulationfiguresarebasedonestimatesofgrowththatmaynotbeaccurateandcomparable. Measurement units are not necessarily equivalent from country to country. For example, in Germany theexpenseincurredonbuyingatelevisionwouldbeclassifiedasentertainmentexpense,whereasintheUnitedStatesitwouldbeclassifiedasfurnitureexpense.Secondarydataareparticularlyusefulinevaluatingcountryormarket environments, whether in making initial market-entry decisions or in attempting to assess future trends and developments. They thus form an integral form of the international marketing research process.

Morespecifically, threemajorusesofsecondarydataarein:Selectingcountriesormarketsthatmerit in-depthinvestigation .Making an initial estimate of demand potential in a given country or a set of countries.Monitoring environmental changes Secondary data can be used systematically to screen market potential, risks, and likely costs ofoperatingindifferentcountriesthroughouttheworld.Twotypesofgeneralisedproceduresareused.Thefirstprocedureclassifiescountriesontwodimensions:thedegreeofdemographicandeconomicmobility,andthecountry’sdomestic stability and cohesion. The second procedure calculates multiple factor indices for different countries.

For example, Business International publishes information each year on three indices showing:market growth, •market intensity, and •marketsize,forcountriesinWesternandEasternEurope,theMiddleEast,LatinAmerica,Asia,Africa,and•Australia.

Customisedmodels,whicharegearedtospecificcompanyobjectivesandindustrycharacteristic,canalsobedevelopedusing secondary data. Once the appropriate countries and markets to be investigated in depth have been determined, the next step is to make an explicit evaluation of demand in those countries or markets.This is important when considering initial market entry, because of the high costs and uncertainty associated with entering new markets. Management has to make an initial estimate of demand potential, and also project future market trends. Four types ofdataanalysesareuniquetodemandestimationinaninternationalcontext.Thefirstandthemostsimplisticislead-lag analysis. This uses time-series (yearly) data from a country to project sales in other countries. A second procedure is the use of surrogate indicators. This is similar to the use of general macroindicators, but develops the macroindicatorsrelativetoaspecificindustryorproductmarket.Anexampleofasurrogateindicatoristhenumberof childbirths in the country as an indicator of the demand potential for diapers. A third technique, which relies on the use of cross-sectional data (data from different countries), is analogous to the use of barometric procedures in domestic sales forecasting.

One assumes that if there is a direct relationship between the consumption of a product, service, or commodity and an indicator in one country, the same relationship will hold in other countries to estimate the demand. The fourth and most complex forecasting model is the econometric forecasting model. This model uses cross-sectional and time-series data on factors underlying sales for a given product market for a number of countries to estimate certain parameters. Later, these models can be used to project the market demand. A third use of secondary data in an international context is to monitor environmental changes. Monitoring environmental changes requires surveillanceofanumberofkeyindicators.Theseshouldbecarefullyselectedandtailoredtothespecificproductorrangeofproductswithwhichmanagementisconcerned.Twotypesofindicatorsarerequired.Thefirstmonitorsthegeneralhealthandgrowthofacountryanditseconomyandsociety;thesecond,thoseofaspecificindustryor product market. A variety of procedures can be used to analyse the impact of environmental factors on world


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trends or industrial countries, and on product markets, as well as the implications for market growth and appropriate marketing strategies. These range from simple trend projections or tracking studies and the use of leading indicators to the more complex scenario evaluation studies.

2.3 Standardised Sources of Marketing DataThe following explain the standardised sources of marketing data:2.3.1 Standardised Sources of Marketing DataA number of services have evolved to measure consumer exposure to the various media and advertisements. The use of standardised data sources has been revolutionised by so-called single-source data from scanner systems. Thismeansthatalldataonproductpurchasesandcausalfactors,suchasmediaexposure,promotioninfluence,andconsumer characteristics, come from the same households. These data are being made possible through advances in information technology whose full impact is only slowly being understood .It does not appear that single source data will fully displace other standardised sources, but it will be used in conjunction with them to generate important new insights. From store audits and warehouse withdrawal services, we can learn how much product is moving through the distribution channel. As this information is one step removed from the actual purchase transaction, we still don’t knowwhobought,howfrequentlytheybought,orwhethertheseemingstabilityofmarketsharesreflectsstablepurchasing patterns or a great deal of switching back and forth between brands and stores in response to short-term promotional efforts. To answer these questions, we need detailed records of purchasing activity by the same people over an extended period of time. Here are two methods for collecting this data:

In the home audit approach the panel member agrees to permit an auditor to check the household stocks of certain product categories at regular intervals. A secondary condition is that the panel member save all used cartons, wrappers, and so on, so the auditor can record them.

In the mail diary method the panel member records the details of each purchase in certain categories and returns the completed diary by mail at regular intervals (biweekly or monthly).Both types of panels are used extensively in Europe, whereas in the United States and Canada the mail dairy method is dominant. When comparisons have been possible, the two methods have produced equally accurate market share and trend data. The data from a panel can be analysed as a series of snapshots providing information on aggregate sales activity, brand shares, and shifts in buyer characteristics and types of retail outlets from one month to the next. However, just as a motion picture is more revealing than a snapshot, it is the ability to measure changes in the behavior of Individuals that is the real advantage of a panel. Knowledge of the sequence of purchases makes it possible to analyse:

Heavy buyers and their associated characteristics•Brand-switching rates and the extent of loyal buying (Evidence of stable purchase activity in the aggregate •usually masks a great deal of individual movement.)Cumulative market penetration and repeat purchase rates for new products (The success of new products depends •jointly on the proportion that have tried them once and then purchased them a second, third, or fourth time.)

In comparison with interview methods, although not with audits, the continuous purchase panel has the advantage of accuracy. Several studies have found that interview respondents will exaggerate their rate of purchasing (an effect that is most pronounced for infrequently purchased products) and dramatically oversimplify brand-switching behavior. Apparently,surveyrespondentstendtoequatetheirmostrecentbrandbuyingwiththe“normal”behaviorwhetherornotthisisaccurate.Thelimitationsallrelatetothevulnerabilityofpanelstovariousbiases.Thefirstproblemencountered is selection bias, because of the high rates of refusal and the resulting lack of representativeness. It is estimated that panel recruitment rates may vary from as low as 10 to 15 percent when the initial contact is made by mail in the United States, to 50 percent or more for personal contacts made on behalf of panels in Great Britain. Panels also are subject to a variety of testing effects.

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Thereisadefinitetendencyfornewpanelmemberstoreportunusuallevelsofpurchasingbecauseofthenoveltyof thereportingresponsibility.Thiseffect issopronounced that thefirstmonth’s resultsusuallyarediscarded.Surprisingly, there is little evidence to suggest that there is any long-run conditioning behavior that would lead to great brand loyalty or price consciousness that would produce systematically biased data. Another area in which there is a great deal of commercial information available for marketers relates to advertising and media.

A number of services have evolved to measure consumer exposure to the various media and advertisements. The Nielsen Television Index (NTI) is probably the best known of all the commercial services available in this category. Asasystemforestimatingnationaltelevisionaudiences,NTIproducesa“rating”andcorrespondingshareestimate.A rating is the percent of all households that have at least one television set tuned to a program for at least 6 of every 15 minutes that the program is telecast. Share is the percent of households that have a television set that is tunedtoaspecificprogramataspecifictime.Arbitron,asubsidiaryofControlData,maintainsbothnationalandregional radio and TV panels.

The panel members are chosen by randomly generated telephone numbers, to ensure that households with unlisted numbers are reached. Those household members who agree to participate when called are sent diaries in which they are asked to record their radio listening behavior over a short duration. Most radio markets are rated only once or twice a year; however, some larger ones are rated four times a year. The TV diary panel is supplemented with a sample of households that have agreed to attach an electronic meter to their television sets. Arbitron produces custom reports for clients. Typically, these are based on an interactive computer-based system called Arbitron Information onDemand(AID).TheStarchReadershipServicemeasuresthereadershipofadvertisementsinmagazinesandnewspapers. [Note] The Starch surveys employ the recognition method to access a particular ad’s effectiveness. Four degrees of reading are recorded:

Nonreader: A person who does not remember having seen the advertisement in the issue.•Noted: A person who remembers seeing the advertisement in the issue.•Associated:Apersonwhonotonly“noted”theadvertisement,butwhoalsosaworreadsomepartofitthat•clearly indicated the brand or advertiser.Read Most: A person who read 50 percent or more of the written material in the ad. Because newspaper and •magazinespacecostdataarealsoavailable,a“readersperdollar”variablecanbecalculated.Thefinalsummaryreport from Starch shows each ad’s (one-half page or larger) overall readership percentages, readers per dollar, and rank when grouped by product category.

2.3.2 Marketing Research on the Internet TodayLike any traditional information resource, the Internet has certain advantages and disadvantages. The value of the Internetasamarketingresearchtoolisarguedbysomepeopletoday.TheythinkthatqualityinformationishardtofindandthattheInternetistooslow.Althoughthereissometruthtothesestatements,theyneedsomequalification.

Like any traditional information resource, the Internet has certain advantages and disadvantages. Some information can be searched well on the Internet when other information sources are not available at all. Besides this, the Internet ischaracterisedbyverydynamic technologicaldevelopments,which in turn influence the informationsearch process.

As the population of the Internet and on-line users increases, new research issues have arisen concerning the demographics and psychographics of the on-line user and the opportunities for a product or service. On-line focus groups are conducted entirely on-line everything from recruitment and screening (which the recruiter does via e-mail) to moderation of the discussion itself. This method allows researchers to reach target segments more effectively. As the on-line population increases, the demographics broaden, enabling remote global segments to be reached, something not possible via traditional methods.

One of the limitations to on-line research is that the results cannot be projected to the general population because not everyone has access to a computer, modem, and on-line service. Another difference between on-line and traditional qualitative research is that cyberspace is populated by trend leaders. Commonly targeted by marketers,


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advertisers, and product manufacturers, trend leaders are early adopters who try out new ideas, products, services, and technologies before these innovations reach popularity in the mass market.

Companies are increasingly collecting information from their Web site visitors. Especially for companies which sell over the Web, collecting information about potential customers who have Internet access is critical. This type of data collection can serve a number of purposes:

Counting and describing Web site visitors in order to customise Web site content to suit their needs•Collecting additional information for customer databases, which then may be used by product development, •sales, marketing, or service departmentsReceiving questions or suggestions regarding the use of a product•Receiving and answering complaints•

Finding out information about competitor activities is an important task for businesses. Internet is a prime tool for this task, since it reduces the time spent and may increase substantially the quality of the information collected. Both productandfinancialinformationareprobablysuitedbestforcompetitivetracking.Especiallylargercorporationsdisplay this information most often on their Websites. On the other hand, pricing information might not be amenable to tracking readily, since it is not too common for businesses to display product prices (unless they actually sell over the Internet).

Competitive promotion and distribution information is probably the least suited to tracking via the Internet. Information about products or companies can be obtained using search engines on the Web. However; search engines have certain limitations and hence do not guarantee that all relevant information has been obtained. For this purpose, there are providers of custom search services, who search for information for a fee. The time when one could keep up with the information on the World Wide Web is already ancient history. With the Web growing dramatically, it becomesimpossibletotrackevenasmallandwell-definedsegmentoftheWeb.

Therefore,themarketresearcherhasevenmoredifficultyfindingtheinformationheorsheseeks.Intranetsareinternal company networks. While corporations are looking for ways and means of communicating to consumers through the World Wide Web, it is apparent that intranets are the building blocks for successful commercial activity. These internal networks start off as ways for employees to connect to company information. Intranets may also incorporate connections to the company’s various suppliers.

According to many industry experts, the advent of total commercial integration is fairly close employees, suppliers, and customers will soon operate in a totally seamless environment. The advantage for an intranet user is that he or she can connect to the Internet easily, whereas Internet users cannot access intranets without appropriate security codes. The utilisation of intranets will aid in the communication and distribution of information inside large corporations. This is especially crucial forfirmswhere information andknow-how ismission-critical, such asmanagementconsultants or software developers.

Once information is gathered, it is stored in internal databases so that it can be accessed from any company location in theworld.By researching internaldatabases in thefirstplace, thedangerofduplicating information searchprocedures in separate locations is minimised and therefore the return on information is maximised. There are a numberofpromisingtechnologiesonthehorizonwhichallhaveacommonobjective:toincreasethebandwidthoftheInternet.Thedemandforhigh-speedconnectionsishuge,sincemoreandmorelargedatafilessuchasmultimediaapplications are sent over the Internet.

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2.4 Information Collection: Qualitative and Observational MethodsThe following point out the qualitative and observational methods of information collection:2.4.1 Using Qualitative Methods for Information CollectionTherealityinthekitchenorsupermarketdiffersdrasticallyfromthatinmostcorporateoffices.Thepurposeofqualitativeresearchistofindoutwhatisinaconsumer’smind.Itisdoneinordertoaccessandalsogetaroughideaabout the person’s perspective. It helps the researcher to become oriented to the range and complexity of consumer activity and concerns. Qualitative data are collected to know more about things that cannot be directly observed and measured. Feelings, thoughts, intentions, and behavior that took place in the past are a few examples of those things that can be obtained only through qualitative data collection methods. It is also used to identify likely methodological problems in the study, and to clarify certain issues that were not clear in the problem. Sometimes it may not be possible or desirable to obtain information from respondents by using fully structured or formal methods.

Qualitative data collection methods are used in such situations. People may be unwilling to answer some questions when confronted with them directly. Questions that they perceive as invasion of privacy, that they think will embarrass them, or that may have a negative impact on their ego or status will not be answered. Sometimes, accurate answers will not be forthcoming because they are part of the subconscious mind and cannot be tapped into directly. They are disguised from the outer world through the mechanism of ego defences, such as rationalisation . . . It has been shown that information of this sort can be better obtained from qualitative methods, such as focus-group discussions or projective techniques, than through a formal, structured-survey method of data collection. The basic assumption behind qualitative methods is that an individual’s organisation of a relatively unstructured stimulus indicates the person’s basic perception of the phenomenon and his or her reaction to it. The more unstructured and ambiguous a stimulus is, the more subjects can and will project their emotions, needs, motives, attitudes, and values. The structure of a stimulus is the degree of choice available to the subject.

A highly structured stimulus leaves very little choice: The subject has unambiguous choice among clear alternatives. Astimulusoflowstructurehasawiderangeofalternativechoices.Ifitisambiguous,thesubjectscan“choose”their own interpretations. Collectively, these methods are less structured and more intensive than standardised questionnaire-basedinterviews.Thereisalonger,moreflexiblerelationshipwiththisrespondent,sotheresultingdata have more depth and greater richness of context—which also means a greater potential for new insights and perspectives. The numbers of respondents are small and only partially representative of any target population, makingthempreludesto,butnotsubstitutesfor,carefullystructured,large-scalefieldstudies.Therearethreemajorcategories of acceptable uses of qualitative research methods:

ExploratoryDefiningproblemsinmoredetail.•Suggesting hypotheses to be tested in subsequent research.•Generating new product or service concepts, problem solutions, lists of product features, and so forth.•Getting preliminary reactions to new product concepts.•Pretesting structured questionnaires.•

OrientationLearning the consumer’s vantage point and vocabulary.•Educating the researcher to an unfamiliar environment: needs, satisfactions, usage situations, and problems.•

ClinicalGaining insights into topics that otherwise might be impossible to pursue with structured research methods.•

Individual in-depth interviews are interviews that are conducted face to face with the respondent, in which the subject matter of the interview is explored in detail. There are two basic types of in-depth interviews. They are nondirective and semistructured, and their differences lie in the amount of guidance the interviewer provides. In nondirective interviews the respondent is given maximum freedom to respond, within the bounds of topics of interest to the


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interviewer. Success depends on (1) establishing a relaxed and sympathetic relationship; (2) the ability to probe in order to clarify and elaborate on interesting responses, without biasing the content of the responses; and (3) the skill of guiding the discussion back to the topic outline when digressions are unfruitful, always pursuing reasons behind the comments and answers. A focus-group discussion is the process of obtaining possible ideas or solutions to a marketing problem from a group of respondents by discussing it.

The emphasis in this method is on the results of group interaction when focused on a series of topics a discussion leaderintroduces.Eachparticipantinagroupoffivetonineormorepersonsisencouragedtoexpressviewsoneachtopic, and to elaborate on or react to the views of the other participants. The objectives are similar to unstructured in-depth interviews, but the moderator plays a more passive role than an interviewer does. The focus-group discussion offers participants more stimulation than an interview; presumably this makes new ideas and meaningful comments more likely. Among other advantages, it is claimed that discussions often provoke more spontaneity and candour than can be expected in an interview. Some proponents feel that the security of being in a crowd encourages some participantstospeakout.Focusgroupscanbeclassifiedintothreetypes.

2.4.2 Exploratory Focus GroupsExploratory focus groups are commonly used at the exploratory phase of the market research process to aid in definingtheproblemprecisely.Theycanalsobeviewedaspilottesting:Exploratorygroupscanbeusedtogeneratehypotheses for testing or concepts for future research.

2.4.3 Clinical Focus GroupsClinical focus groups involvequalitativeresearchinitsmostscientificform.Theresearchisconductedasascientificendeavor, based on the premise that a person’s true motivations and feelings are subconscious in nature. The moderator probes under the level of the consumer’s consciousness. Obviously, clinical groups require a moderator withexpertiseinpsychologyandsociology.Theirpopularityislessbecauseofthedifficultyofvalidatingfindingsfrom clinical groups and because unskilled operators sometimes attempt to conduct clinical groups. The reality in thekitchenorsupermarketdiffersdrasticallyfromthatinmostcorporateoffices.

2.4.4 Experiencing Focus GroupsAllow the researcher to experience the emotional framework in which the product is being used. Thus an experiencing approachrepresentsanopportunityto“experience”a“flesh-and-blood”consumer.Mostofthelimitationsofthesequalitative methods stem from the susceptibility of the results in misuse, rather than their inherent shortcomings. Thereisagreattemptationamongmanymanagerstoacceptsmall-sampleexploratoryresultsassufficientfortheirpurposes, because they are so compelling in their reality. The dangers of accepting the unstructured output of a focus group or a brief series of informal interviews are twofold. First, the results are not necessarily representative of what would be found in the population, and hence cannot be projected. Second, there is typically a great deal of ambiguityintheresults.Theflexibilitythatisthehallmarkofthesemethodsgivesthemoderatororinterviewergreatlatitude in directing the questions; similarly, an analyst with a particular point of view may interpret the thoughts and comments selectively to support that view. In view of these pitfalls, these methods should be used strictly for insights into the reality of the consumer perspective and to suggest hypotheses for further research.

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SummarySecondary data• are data that were collected by persons or agencies for purposes other than solving the problem at hand. They are one of the cheapest and easiest means of access to information.Secondary data can also serve as a reference base against which to compare the validity or accuracy of primary •data.A company’s internal records, accounting and control systems, provide the most basic data on marketing inputs •and the resulting outcomes. The principal virtues of these data are ready availability, reasonable accessibility on a continuing basis, and •relevance to the organisation’s situation.Data from highly industrialised nations are likely to have a higher level of accuracy than data from developing •countries, because of the difference in the sophistication of the procedures adopted.Thefirstproblemencounteredisselectionbias,becauseofthehighratesofrefusalandtheresultinglackof•representativeness.TheStarchReadershipServicemeasuresthereadershipofadvertisementsinmagazinesandnewspapers.•Qualitative data are collected to know more about things that cannot be directly observed and measured. Feelings, •thoughts, intentions, and behavior that took place in the past are a few examples of those things that can be obtained only through qualitative data collection methods.

ReferencesStewart, D. W. & Kamins, M. A., 1992. • Secondary Research: Information Sources and Methods, 2nd ed., SAGE Publishers.Beri, B., 2007. • Marketing Research, 4th ed., Tata McGraw – Hill Education. Timiras, L. & Boier , R., • Secondary Sources of Marketing Data, [pdf] Available at: <http://www.ce.tuiasi.ro/old_site_paulet/romana/publicatii/cursuri/Rodica%20Boier/Applications.pdf>[Accessed7November2012].Smith, S. M. & Albaum, G. S., • Secondary Sources of Marketing Data, [pdf] Available at: <http://cloudfront.qualtrics.com/q1/wp-content/uploads/2012/02/BasicMarketingResearch.pdf>[Accessed7November2012].Bradley, N., • Secondary Sources of Marketing Data, [Video Online] Available at: <https://www.youtube.com/watch?v=iYQtSf-eJO0>[Accessed7November2012].Richea, J., • Secondary Sources of Marketing Data, [Video Online] Available at: <https://www.youtube.com/watch?v=sq4wjqVIx5U>[Accessed7November2012].

Recommended ReadingWrenn, W. B., Sherwood, P. & Ruddick, M., 2005. • The Marketing Research Guide, 2nd ed., Routledge.Dogra, H., 2007. • Rural Marketing, 7th ed., Tata McGraw-Hill Education.Capon, N., 2009. • Capon’s Marketing Framework, 3rd ed., Wessex Publishing.


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Self AssessmentWhich data is collected by persons or agencies for purposes other than solving the problem at hand?1.

Primarya. Secondaryb. Collectivec. Non-Collectived.

Extensive data on outcomes can be obtained from the billing records on shipments maintained in the _____ 2. system.

accounting a. booking b. formatting c. lockingd.

The rate of _______ varies with the type of data, but in all cases the researcher should know when the data 3. were collected.

obstinencea. obsolescenceb. abstinencec. absenced.

The utilisation of _________ will aid in the communication and distribution of information inside large 4. corporations.

interneta. intranetb. extranetc. networkd.

Competitive promotion and distribution information is probably the least suited to tracking via the ________.5. interneta. intranetb. extranetc. networkd.

There are _____ basic types of in-depth interviews.6. twoa. threeb. fourc. fived.

The numbers of respondents are _______.7. largea. smallb. mediumc. extremely larged.

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The structure of a ________ is the degree of choice available to the subject.8. subjecta. stimulusb. communicationc. promotiond.

There are _________ major categories of acceptable uses of qualitative research methods.9. twoa. threeb. fourc. fived.

Therealityinthekitchenorsupermarketdiffersdrasticallyfromthatinmost_________offices.10. passporta. corporateb. corporationc. national d.


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Chapter III

Market Strategy and Analysis

Aim


explain the concept of market analysis•

elucidate the concept of marketing strategy•

explicate decision making process •

Objectives

The objectives of this chapter are to:

explain consumer decision process•

elucidate 4p’s of marketing strategy•

enlist characteristic features of Indian consumer•

Learning outcome


understand the 4-Cs of marketing •

analyse decision making process•

understand consumer decision process•

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3.1 Market AnalysisMarket analysis requires an understanding of the 4-Cs which are consumer, conditions, competitor and the company. A study is undertaken to provide superior customer value, which is the main objective of the company. For providing better customer value we should learn the needs of the consumer, the offering of the company, vis-a-vis its competitors and the environment which is economic, physical, technological, etc. A consumer is anyone who engages himself in physical activities, of evaluating, acquiring, using or disposing of goods and services.

A customer is one who actually purchases a product or service from a particular organisation or a shop. A customer isalwaysdefinedintermsofaspecificproductorcompany.

However, the term consumer is a broader term which emphasises not only the actual buyer or customer, but also its users, i.e., consumers. Sometimes a product is purchased by the head of the family and used by the whole family, i.e., a refrigerator or a car. There are some consumer behaviour roles which are played by different members of the family.

Role Description

Initiator The person who determines that some need or want is to be met, (E.g. a daughter indicating the need for a colour TV).

Influencer Thepersonorpersonswhointentionallyorunintentionallyinfluencethedecisiontobuyorendorse the view of the initiator

Buyer The person who actually makes a purchase.

User The person or persons who actually use or consume the product.

Table 3.1 Consumer behaviour roles

All the consumer behaviour roles are to be kept in mind but, the emphasis is on the buyer whose role is overt and visible.

3.1.1 The ConsumerTo understand the consumer; researches are made. Sometimes motivational research becomes handy to bring out hiddenattitudes,uncoveremotionsandfeelings.Manyfirmssendquestionnairestocustomerstoaskabouttheirsatisfaction, future needs and ideas for a new product. On the basis of the answers received, changes in the marketing mix are made and advertising is also streamlined.

3.1.2 The External Analysis (Company)The external analysis may be done by the feedbacks from the industry analyst and by marketing researches. The internalanalysisismadebythefirm’sfinancialconditions,thequantumofthesales,forceandotherfactorswithinthe company.


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The study of these factors leads to a better understanding of the consumer and their needs.

1. Geography2. Population3. Urban-Rural4. Sex5. Age factor6. Literacy level7. Incentive level8. Linguistic diversity9. Religion

10. Dress, food11. Habits and fashion

Indian

Consumer}Fig. 3.1 Characteristic features of Indian consumer

3.1.3 The CompetitionIn the analysis of the market, a study of the strengths and weaknesses of the competitors, their strategies, their anticipated moves and their reaction to the companies’ moves and plans are to be made. The company after getting this information reacts accordingly and changes its marketing mix and the offering is made in a manner which can outdothecompetitor.Thisisaverydifficultprocessanditiseasiersaidthandone.Tohavecorrectinformationabout the competitors and to anticipate their further moves is the job of the researcher.

3.1.4 The ConditionsTheconditionsunderwhichthefirmsareoperatinghavealsotobeseriouslyconsidered.Thefactorstobestudiedare the economy, the physical environment, the government regulations, the technological developments, etc. These effect the consumer needs, i.e. the deterioration of the environment and its pollution may lead to the use and innovation of safer products. People are health conscious and are concerned with their safety. Hence, in this case, saferproductshaveabetterchancewiththeconsumer.Incaseofrecession,theflowofmoneyisrestrictedgreatly.This leads to the formulation of different marketing strategies.

3.1.5 Market SegmentationThe market is divided into segments which are a portion of a larger market whose needs are similar and, they are homogeneousinthemselves.Suchsegmentsareidentifiedwithsimilarneeds.

3.1.6 Need SetByneed set, it ismeant that there are productswhich satisfymore thanoneneed.An automobile canfill thetransportation needs, status need, fun needs or time saving needs. So the company tries to identify the need sets which itsproductcanfulfil.Thenwetrytoidentifythegroupswhohavesimilarneeds,i.e.somepeopleneedeconomicalcars, others may go for luxury cars.

3.1.7 Demographic and Psychographic CharacteristicsThesegroupsareidentifiedandtheyaredescribedintermsoftheirdemographicandpsychographiccharacteristics.Thecompanyfindsouthowandwhentheproductispurchasedandconsumed.

3.1.8 Target SegmentAfter all the above preliminary work is done, the target customer group known as the target segment is chosen, keepinginmindhowthecompanycanprovidesuperiorcustomervalueataprofit.Thesegmentwhichcanbestbeservedwiththecompany’scapabilitiesataprofitischosen.Ithastobekeptinmindthatdifferenttargetsegmentsrequire different marketing strategies and, with the change in the environmental conditions the market mix has to be adjusted accordingly.

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Attractiveness of the segment can be calculated by marking the various criterions on a 1 to 10 scale as given below:

Criterion Score on 1 to 10 scale with company being most favorable

Segmentsize -

Segment growth rate -

Competitor strength -

Customer satisfaction with existing product -

Fit with company image -

Fit with company objectives -

Fit with company resources -

Fit with other segments -

Investment required -

Stability/Periodic ability -

Zest to serve -

Sustainable advantage available -

Leverage to other segments/markets -

Risk -

Other factors -

Table 3.2 Criterions for marking attractiveness of the segment

3.2 Marketing StrategyStrategies are formulated to provide superior customer value. In formulating market strategies, the 4-ps are directed at the target market.

Target MarketProduct, Price, Promotion, Place

Fig. 3.2 Decision-making process generally followed by consumers

ProductProduct is anything that is offered to the consumer which is tangible and can satisfy a need and has some value.

PricePrice is the amount of money one must pay to obtain the right to use the product.

Distribution (Place)The goods can be distributed by many channels. These could be retailers, wholesalers, agents or by direct selling. Distribution outlets play an important role in reaching the goods to the consumer. They provide, time, place and


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possession utilities. Some goods need to be marketed through the channels or the middleman. Others can be marketed directly by the company to the actual consumer.

PromotionPromotion is the means of changing the attitudes of the consumer, so that it becomes favourable towards the company’s products. Various means of promotion are advertising, personal selling, sales promotion and publicity.

3.3 ServiceService refers to auxiliary service that enhances the value of the product or the service. For instance, while buying a car. Free services are provided over certain period of time. Check-ups are free and maintenance is also covered on the charge of an adequate amount along with the product purchased. These auxiliary services are provided at a cost with money. These provide value to the product or the customer. These services give an advantage to the customer and he is free from the botheration of occasional checkups or risk. The risk is considerably reduced and, the customer derives satisfaction with his decision to purchase. Product, Price, Promotion, Place Target Market

3.4 Consumer Decision ProcessThe decision-making process consists of a series of steps which the consumer undergoes. First of all, the decision is made to solve a problem of any kind. This may be the problem of creating a cool atmosphere in your home. Forthis,informationsearchiscarriedout,tofindhowthecoolatmospherecanbeprovided,e.g.byanair-conditioneror,byawater-cooler.Thisleadstotheevaluationofalternativesandacostbenefit-analysisismadetodecidewhichproduct and brand image will be suitable, and can take care of the problem suitably and adequately. Thereafter the purchase is made and the product is used by the consumer. The constant use of the product leads to the satisfaction or dissatisfaction of the consumer, which leads to repeat purchases, or to the rejection of the product.

The marketing strategy is successful if consumers can see a need which a company’s product can solve and, offers the best solution to the problem. For a successful strategy, the marketer must lay emphasis on the product/brand image in the consumer’s mind. Position the product according to the customers likes and dislikes. The brand which matches the desired image of a target market sells well. Sales are important and sales are likely to occur if the initial consumer analysis was correct and matches the consumer decision process.

Problem Recognition

Information searchexternal and internal

Evaluation and selection

Store choice and purchases

Post-purchase Behaviour

Fig. 3.3 Decision process

Satisfaction of the consumer, after the sales have been affected, is important for repeat purchase. It is more profitabletoretainexistingcustomers,ratherthanlookingfornewones.Thefigurebelowgivesanideaoftheabove discussion.

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Competitorstotal product

Company’stotal product

Consumerdecision process

Sales

Customersatisfaction

Perceivedvalue delivered

Superior valueexpected

Fig. 3.4 Creating satisfied customers


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Summary Market analysis requires an understanding of the 4-Cs which are consumer, conditions, competitor and the •company.A customer is one who actually purchases a product or service from a particular organisation or a shop.•A consumer is anyone who engages himself in physical activities, of evaluating, acquiring, using or disposing •of goods and services.The external analysis may be done by the feedbacks from the industry analyst and by marketing researches. •Theinternalanalysisismadebythefirm’sfinancialconditions,thequantumofthesales,forceandotherfactors•within the company.Product is anything that is offered to the consumer which is tangible and can satisfy a need and has some •value.Price is the amount of money one must pay to obtain the right to use the product.•Promotion is the means of changing the attitudes of the consumer, so that it becomes favourable towards the •company’s products.Service refers to auxiliary service that enhances the value of the product or the service.•The decision-making process consists of a series of steps which the consumer undergoes• .

References2012• , Consumer Behavior: Consumer Decision Making, [Video Online] Available at: <http://www.youtube.com/watch?v=jynsgel4FyU>[Accessed7November2012].2011, Ch. 5 • Consumer Behavior: [Video Online] Available at: <http://www.youtube.com/watch?v=dBmveXPfW1I&feature=related>[Accessed7November2012].Consumer Behaviour• , [pdf]Available at: <http://www.newagepublishers.com/samplechapter/000160.pdf>[Accessed 7 November 2012].Consumer Behaviour• , [pdf]Available at:<http://www.nou.edu.ng/noun/NOUN_OCL/pdf/mkt%20724.pdf>[Accessed 7 November 2012].Noel, H., 2009. • Basics Marketing 01: Consumer Behaviour, AVA PublishingHoyer. W., Macinnis. D. & Dasgupta P., 2008. • Consumer Behaviour, Dreamtech Press

Recommended ReadingMajumdar• , 2010. Consumer Behaviour: Insights from Indian Market, PHI Learning Pvt. Ltd.Schiffman, L. & Kanuk, L., 2009. • Consumer Behavior, 10th ed., Prentice Hall.Sharma, A., 2006. • Consumer Behaviour, Global Vision Publishing Ho.

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Self AssessmentThe decision making process followed by the consumer consists of which the following 4 p’s?1.

Product, Price, Promotion, Placea. Place, Position, Protocol, Priceb. Promotion, Path, Performance, Placec. Product, Plan, Process, Priced.

__________ is anything that is offered to the consumer which is tangible and can satisfy a need and has some 2. value.

Pricea. Productb. Planc. Promotiond.

Which of the following is the characteristic feature of Indian consumer?3. Religiona. Casteb. Sub-Castec. Locationd.

Whichofthefollowingstepsisthefirststepofconsumerdecisionprocess?4. Store choice and purchasesa. Information search – External and Internal b. Evaluation and Selection c. Problem recognitiond.

_______ is the amount of money one must pay to obtain the right to use the product.5. Producta. Placeb. Pricec. Promotiond.

__________ is the means of changing the attitudes of the consumer, so that it becomes favourable towards the 6. company’s products

Producta. Placeb. Pricec. Promotiond.

The _____________ analysis may be done by the feedbacks from the industry analyst and by marketing 7. researches.

externala. internalb. direct c. indirectd.


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The___________analysisismadebythefirm’sfinancialconditions,thequantumofthesales,forceandother8. factors within the company.

externala. internalb. direct c. indirectd.

________ refers to auxiliary service that enhances the value of the product or the service.9. Servicea. Productb. Pricec. Valued.

A _________ is one who actually purchases a product or service from a particular organisation or a shop10. consumera. shopkeeperb. manufacturerc. sellerd.

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Chapter IV

Market Research and Consumer Behaviour

Aim


explain relevance of market research with consumer behaviour•

elucidate the approaches to consumer behaviour research•

explain consumer research process•

Objectives


explain relationship between marketing research and consumer research•

elucidate the approaches to consumer behaviour research•

explicate research perspectives and paradigms on consumer behaviour•

Learning outcome


understand the relevance of market research with consumer behaviour•

identify the relationship between marketing research and consumer research•

describe consumer research process•


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4.1 IntroductionAcomprehensiveyetmeticulousknowledgeofconsumersandtheirconsumptionbehaviourisessentialforafirmto succeed. In order to understand and predict consumption patterns and behaviours within segment (s), market research becomes essential.

4.2 Relevance of Market Research with Consumer BehaviourEach individual is unique in himself/herself and, needs and wants vary from person to person; thus, consumers are different and heterogeneous. However, like-minded clusters of customers do exist; they are homogenous within such clusters and heterogeneous outside; these are referred to as segments. Marketers identify segments and target one or fewofthesesegments,andtherebyfulfilthequalificationsofthemarketingconcept;first,marketersidentifycustomerneedsandwants;andthen,deliverproductandserviceofferingssoastosatisfythecustomersmoreefficientlyandeffectively than the competitors. In order to understand and predict consumption patterns and behaviours within segment (s), market research becomes essential.

Marketingconcept Market research

Study to understand Consumptionpatterns and

behavior

Fig. 4.1 Relevance of market research with consumer behaviour

Market research may be defined as:An organised effort to gather information about the market and the customers.•Systematic collection, analysis and interpretation of data related to the market and the surrounding •environment.

TheenvironmentsurroundingaCompanymaybegroupedasthe“micro-environment”andthe“macroenvironment”.The micro-environment comprises forces in the environment that is close to the company and affects the company directly; for example, the company’s internal environment, the founder/leader and his vision and mission, the customers, competitors, suppliers, and channel intermediaries. The macroenvironment on the other hand, comprises forcesintheenvironmentthatfirstaffectthemicroenvironmentandthroughthattheyaffectthecompany;inotherwords they affect the company indirectly; examples are the demographic factors, socio-economic factors, political factors, technological factors, cultural factors, natural factors, etc. The forces in the macro environment affect all the companies operating in a same industry in a similar manner. The micro-environment is studied in terms of strengths (S) and weaknesses (W), while the macro-environment is studied in terms of opportunities (O) and threats (T). The analysis of both of these put together comprises the SWOT analysis.

Market research helps toUnderstandthespecificmarketingsituationfacingacompany•Identify the needs and wants of customer segment(s)•Identify viable target segment(s)•Serve them better through formulation of appropriate marketing strategies (the Appropriate mix of the 4Ps)•

In other words, market research is essential for formulation of appropriate marketing strategies. Starting with segmentation,targetingandpositioningthemarketingstrategyofafirmdesignsaperfectblendofthemarketingmixor the 4 Ps. Market research helps provide an overview of the environment facing a company. Decisions regarding the product and service mix, pricing, distribution and promotion can be taken keeping in mind the marketing environment on one hand, and the resource constraints on the other.

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Whilethegoalistoachievemaximumefficiencyandeffectiveness,theultimategoalliesinmeetingthecustomerneeds and wants and derive customer satisfaction. This is obtained through a conscious attempt at understanding ‘what’ the customer buys,

‘Why’ he buys, ‘when’ he buys, from ‘where’ he buys, ‘how much’ he buys and ‘how often’ he buys. Herein, lays the“IntegrationofMarketResearchwithConsumerBehaviour.”

MarketingResearch→understandandpredictConsumerBehavioura. ConsumerResearch→processandtoolsusedtostudyConsumerBehaviourb. Marketingresearch→ConsumerResearchc.

Points Marketing Research Consumer Research

Objectives To study the marketing environment and the customers who are a part of it.

To study consumers as individuals or as groups

Focus

To establish trends, and identify opportunities and threats in the environment.- To study the market and forecast potential- To predict buying patterns based on modelling and simulation

To understand consumption behaviour and consumption patterns

End Results Customer connect with company -Individual marketing and customisation

Customer connect with company-Individual marketing and customisation

Table 4.1 Relationship between marketing research and consumer research

4.3 Approaches to Consumer Behaviour ResearchBroadly speaking there are two approaches towards consumer behaviour research. These are:

Approaches to Consumer Behaviour Research

Traditional Approach Current Approach

Fig. 4.2 Approaches to consumer behaviour research

These can be further divided into sub approaches.

4.3.1 Traditional ApproachThis is further divided into two approaches, Positivist and Interpretive.

Positivist approachThisapproachalsoreferredtoas“modernism”,istheearliestapproachtostudyingconsumerbehaviourandtreatsthe study as an applied science; the paradigm lays emphasis on science as a means of explaining behaviour. It lays emphasis on the causes of consumer behaviour and as per its proponents; these causes are directly related to effects.


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Thus,ittreatsconsumersas“rational”humanbeings,whomakepurchasedecisionsaftercollectinginformationandweighingallalternatives.Theprocessofconsumerdecisionmakingislookeduponasoneof“rationality.”“Rationaldecisionmakesandproblemsolving”isthekey.Theapproachisbasedoncertainassumptionsviz.

Consumer actions based on cause and effect relationship can be generalised; they can be objectively measured •and empirically tested;If a marketer/researcher could identify the reasons behind consumption behaviour; he would be able to predict it; •andiftheycouldpredictconsumerbehaviour,theycouldinfluenceit.Thefocusliesonpredictionofconsumerbehaviour. The methodology is essentially quantitative, with techniques including surveys, observations, and, experiments. It aims at drawing conclusions on large samples.

Interpretive approachThisapproachisalsoreferredtoas“post-modernismorexperientialist.”Graduallytherewasashiftintheapproachtowards the study of consumer behaviour and the positivist approach gave way to a new approach that came to be called post-modernism. The approach lays emphasis on understanding the customer better. It treats consumer decision makingprocessasonewhichis“subjective.”Thuswhiletheapproachisessentiallysubjective,theresearchersfollowing this approach try to identify common patterns.

Thisapproachisalsobasedoncertainassumptionsviz.:Consumer actions are unique and different both, between two consumers, and/or within the same consumer at •different times and situations.A cause and effect relationship cannot be generalised; consumption patterns and behaviours are unique; these •are unpredictable.They cannot be objectively measured, empirically tested and generalised.•The focus lies on the act of consumption rather than the act of purchase. The methodology is essentially •qualitative, with techniques including in depth interviews, focus group techniques, and projective techniques. It aims atdrawing conclusions on small samples.

Positivist Interpretivist

Consumer actions based on cause and effect relation-ship can be generalised

Consumer actions based on cause and effect relation-ship cannot be generalised; consumption patterns and behaviours are unique; these are unpredictable.

Consumer actions can be objectively measured and empirically tested

Consumer actions are unique and different both, be-tween two consumers, and/or within the same con-sumer at different times and situations. Cannot be objectively measured, empirically tested and gener-alised.

Focus: to predict consumer behaviour Focus: the act of understanding the consumption rath-er than predicting the act of purchase

Methodology: Quantitative Methodology: Qualitative

Large samples Small samples

Table 4.2 The positivist and interpretive approach

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4.3.2 Current Approach: ‘Dialectical’The term ‘dialectics’ considers all forms of human behaviour; thus the current approach to the study of consumer behaviour research is broader in scope. This is further divided into four approaches, Materialism, Change, Totality and Contradiction.

Materialism This approach implies that consumer behaviour is shaped by the‘Material environment’ for example,. money, possessions, etc.

Change Consumer behaviour is ‘dynamic’ in nature; it is always in a process of continuous motion, transformation and change.

Totality Consumption behaviour is ‘interconnected’ with other forms of human behaviour, like personal self and the surrounding environment.

Contradiction

Views changes in consumer behaviour as arising from their internal contradictions, like moods, emotions etc.

The approach studies the consumer as a complex total whole and views consumer purchase as well as consumption processes. The current ap-proach to studying Consumer Behaviour uses both the quantitative as well as qualitative approaches.

Table 4.3 Current approaches

4.4 Research Perspectives on Consumer BehaviourThere are three broad research perspectives in consumer behaviour. They are as follows: the Decision-Making perspective,theexperientialperspective,andBehavioural-Influenceperspective.

The Decision-Making Perspective

According to the decision making perspective, the buying process is a sequential in nature, with the consumer perceiving that there exists a problem and then moving across a series of logical and rational steps to solve the problem; stages being problem recognition, information search, evaluation of alternatives, purchase decision, and post purchase behaviour. This perspective emphasises the rational, logical and cognitive approach to consumer decision making and purchase process.

The Experiential Perspective

The experiential perspective believes that not all buying may be rational and logical; in some cases, buying results from a consumers’ desire for fun and fantasy, hedonic pleasures, emotions and moods. The perspective emphasises thatconsumersare“feelers”aswellasthinkers.

The Behavioural Influence Perspective

This perspective holds that forces in the environment stimulate a consumer to make purchases without developing beliefs and attitudes about the product.

Table 4.4 Research perspectives on consumer behaviour

4.5 Research Paradigms in Consumer BehaviourTheresearchparadigminthestudyofconsumerbehaviourfocusesontwoapproachesviz.,Quantitativeresearch,used by the positivists and, Qualitative research: used by the interpretivists. The positivists and interpretivists as two schools of thought have already been discussed in the previous lesson. The current approach or the ‘dialectic’ approach to studying Consumer Behaviour makes use both the approaches.


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4.5.1 Quantitative Research in Consumer BehaviourAs the name suggests, the approach makes application of quantitative research techniques to the study of Consumer Behaviour. It comprises (i) research techniques that are used to gather quantitative data over large samples randomly, and (ii) statistical tools and techniques, inclusive of survey techniques, observation and experiments. This type of research is descriptive and empirical in nature. It is primarily used by the positivists while studying consumer behaviour,withafocusonpredictionofconsumerbehaviour.Thefindingscanbegeneralisedtomarketingsituations.Asmentionedabove,thequantitativetechniquesarealsousedby“dialectics”.

4.5.2 Qualitative Research in Consumer BehaviourThis approach makes application of qualitative research techniques to the study of Consumer Behaviour. It comprises (i) research techniques that are used to gather qualitative data over small samples randomly and, (ii) non-statistical tools and techniques, inclusive of depth interviews, focus group, projective techniques and even observation. The typeofstudyissubjectiveandnon-empiricalinnature.Itlaysemphasisontheholistic“what,where,when,whyandhow”ofhumanbehaviour”.Thefocusisonunderstandingconsumptionbehaviourandconsumptionpatterns.Theobjective is to gain an understanding of consumer behaviour and the underlying causes that govern such behaviour. Theapproachassumesthatallmarketingsituationsareunique;and,hencethefindingscannotbegeneralisedtomarketing situations. This approach is primarily used by the interpretivists while studying consumer behaviour. However,asmentionedabove,thequalitativetechniquesarealsousedby“dialectics”.

Combining the two approachesToday the two approaches are used in combination to study consumer behaviour. Qualitative research is very often apreludetoquantitativeresearch;thefindingsfromqualitativeresearchareusedtopreparescalesforsurveysandexperiments.Insomecasesquantitativeresearchmayalsoactasaprecursortoqualitativeresearch;thefindingfromquantitative research are corroborated through case studies and other Qualitative measures.

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Summary A comprehensive yet meticulous knowledge of consumers and their consumption behaviour is essential for a •firmtosucceed.Positivistapproachalsoreferredtoas“modernism”,istheearliestapproachtostudyingconsumerbehaviour•and treats the study as an applied science; the paradigm lays emphasis on science as a means of explaining behaviour.The environment surrounding aCompanymay be grouped as the “micro- environment” and the “macro•environment”.Market research is essential for formulation of appropriate marketing strategies•Decisions regarding the product and service mix, pricing, distribution and promotion can be taken keeping in •mind the marketing environment on one hand, and the resource constraints on the other.The term ‘dialectics’ considers all forms of human behaviour; thus the current approach to the study of consumer •behaviour research is broader in scope.

References2011, • Consumer Purchase Behaviour – Part one. Mp4 (#12) In Series [Video Online] Available at: <http://www.youtube.com/watch?v=cgquAxliWss>[Accessed8November2012].2012, • Market Research – How to get better results: customer insight, customer trends – Marketing keynotes [Video Online]Availableat:<http://www.youtube.com/watch?v=BxyYNlmI2CI>[Accessed8November2012].2012, • Qualitative and Quantitative Methods in Understanding Consumer Behavior [Online] Available at: <http://www.scribd.com/doc/36247917/Qualitative-and-Quantitative-Methods-in-Understanding-Consumer-Behavior>[Accessed 8 November 2012].Consumer Behaviour – Consumer Research• [pdf] Available at: <http://www.microweb.cl/idm/documentos/investdeconsumidores.pdf>[Accessed8November2012].Dr. Sarangapani, A., 2010. • A Textbook on Rural Consumer Behaviour in India - A Study of FMCGs, Laxmi Publications, Ltd.Kumar, R., 2008. • Conceptual Issues in Consumer Behaviour The Indian Context, Pearson Education India.

Recommended ReadingSchiffman Leon, G., 1988. • Consumer Behavior, Pearson Education IndiaPaul, P., 2007. • Consumer behaviour and Marketing Strategy, McGraw-Hill/IrwinAssael, H., 2003. • Consumer Behavior: A Strategic Approach, South-Western College Pub.


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Self Assessment___________ becomes essential to understand and predict consumption patterns and behaviours of the 1. consumers.

Market surveya. Market researchb. Market planningc. Market strategyd.

___________ is the organised effort to gather information about the market and the customers.2. Market researcha. Marketing planningb. Market studyc. Market evaluationd.

Systematic collection, analysis and interpretation of data related to the market and the surrounding environment 3. is called as ____________

marketing planninga. market studyb. market evaluationc. market researchd.

To identify the needs and wants of customer segment(s), which of the following aspect is important?4. Marketing planninga. Market studyb. Market researchc. Market evaluationd.

Two main approaches to Consumer Behaviour Research are _________5. traditional approach and current approachesa. economicandfinancialapproachb. traditional and humanist approachesc. latest and traditional approachesd.

TraditionalApproachtoConsumerBehaviourResearchisclassifiedinto_________6. positivist approach and interpretive approacha. positive approach and negative approachb. traditional approach and current approachesc. economicandfinancialapproachd.

____________to consumer behaviour research assumes that Consumer actions based on cause and effect 7. relationship can be generalised; they can be objectively measured and empirically tested.

Traditional approacha. Interpretive approachb. Current approachc. Positivist approachd.

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____________ assumes that Consumer actions are unique and different both, between two consumers, and/or 8. within the same consumer at different times and situations.

Traditional approacha. Interpretive approachb. Current approachc. Positivist approachd.

__________ believes buying results from a consumers’ desire for fun and fantasy9. The experiential perspectivea. The decision-making perspectiveb. Thebehaviouralinfluenceperspectivec. Current approach perspectived.

According to __________ to consumer behaviour is ‘dynamic’ in nature; it is always in a process of continuous 10. motion, transformation and change.

change approacha. materialism approachb. totality approachc. contradiction approachd.


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Chapter V

Attitude Measurement in Marketing Research

Aim


explain the concept attitude measurement•

explicate how to design marketing research questionnaire•

explore experimental research•

Objectives


definesamplingfundamentals•

enlist data analysis•

explicate selection of response variable•

Learning outcome


identify performing the experiment•

describe data analysis•

understand recommendations•

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5.1 Introduction: Attitude Measurement in Marketing ResearchAttitudes are mental states used by individuals to structure the way they perceive their environment and guide the way they respond to it. There is general acceptance that there are three related components that form an attitude: a cognitive or knowledge component, a liking or affective component, and an intentions or actions component. Each component provides a different insight into a person’s attitude. The cognitive or knowledge component represents a person’s information about an object. This information includes awareness of the existence of the object, beliefs about the characteristics or attributes of the object, and judgments about the relative importance of each of the attributes. The affective or liking component summarises a person’s overall feelings toward an object, situation, or person, on a scale of like-dislike or favorable-unfavorable.

When there are several alternatives to choose among, liking is expressed in terms of preference for one alternative overanother.Preferencescanbemeasuredbyaskingwhichis“mostpreferred”orthe“firstchoice,”whichisthe“secondchoice,”andsoforth.Affectivejudgmentsalsocanbemadeabouttheattributesofanobject.Theintentionor action component refers to a person’s expectations of future behavior toward an object. Intentions usually are limitedtoadistincttimeperiodthatdependsonbuyinghabitsandplanninghorizons.Thegreatadvantageofanintentions question is that it incorporates information about a respondent’s ability or willingness to pay for the object, or otherwise take action. One may prefer Aspen over all other ski areas in the Rockies but have no intention of going next year because of the cost.

Measurement canbedefinedasastandardisedprocessofassigningnumbersorothersymbolstocertaincharacteristicsoftheobjectsofinterest,accordingtosomeprespecifiedrules.Measurementoftendealswithnumbers,becausemathematical and statistical analyses can be performed only on numbers, and they can be communicated throughout the world in the same form without any translation problems. For a measurement process to be a standardised process of assignment, two characteristics are necessary. First, there must be one-to-one correspondence between the symbol and the characteristic in the object that is being measured. Second, the rules for assignment must be invariant over time and the objects being measured. Scaling is the process of creating a continuum on which objects are located according to the amount of the measured characteristic they possess. An illustration of a scale that is often used in research is the dichotomous scale for sex.

The object with male (or female) characteristics is assigned a number 1 and the object with the opposite characteristics is assigned the number 0. This scale meets the requirements of the measurement process in that the assignment is one to one and it is invariate with respect to time and object. Measurement and scaling are basic tools used in the scientificmethodandareusedinalmosteverymarketingresearchsituation.Theassignmentofnumbersismadeaccording to rules that should correspond to the properties of whatever is being measured. The rule may be very simple as when a bus route is given a number to distinguish it from other routes. Here the only property is identity, and any comparisons of numbers are meaningless. This is a nominal scale. At the other extreme is the ratio scale, which has very rigorous properties. In between the extremes are ordinal scales and interval scales. Single-item scales are those that have only one item to measure a construct. Under the single-item scales, the itemised category scale is the most widely used by marketing researchers. In some situations, comparative scales, rank-order scales, or constant-sum scales have advantages.

Attitude rating scales are widely used to test the effectiveness of advertising copy or compare the performance of new product concepts and segment markets. Despite years of experience with these applications, the design of the rating scale is usually an ad-hoc judgment based on the researcher’s preferences and past experiences in similar situations.

The various decisions that a researcher has to make regarding the form and structure of the scale while designing ascalearedescribedbrieflybelownumberofscalecategories.Theoretically,thenumberofrating-scalecategoriescanvaryfromtwotoinfinity.Acontinuousratingscalehasinfinitecategories,whereasthenumberofcategoriesina discontinuous scale depends on several factors, such as the capabilities of the scales, the format of the interview, and the nature of the object. For example, if the survey is done by telephone, the number of categories that a scale can have is very limited, because the memory of the respondent is limited.


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Types of poles used in the scale. All rating scales have verbal descriptors or adjectives that serve as end points or anchors.Thescalecanhaveasinglepoleortwopoles.Anexampleofatwo-polescaleis“sweetnotsweet,”andanexample of a scale with a single pole is the Stapel scale. The advantage of the single-pole scale over the scale with double poles is ease of construction, as one need not look for adjectives to achieve bipolarity. The disadvantage is that we do not know what each category represents in a single-pole scale.

Strength of the anchors•Labeling of the categories•Balance of the scale•

5.2 Designing a Marketing Research QuestionnaireAgoodquestionnaireaccomplishestheresearch’sobjectives.Surveysmustbecustom-builttothespecificationof given research purposes, and they are much more than a collection of unambiguous questions. A number of constraints are imposed on the development of an appropriate questionnaire. For example, the number, form, and orderingofthespecificquestionsarepartlydeterminedbythedatacollectionmethod.Therespondent’swillingnessandabilitytoansweralsoinfluencesthefinalquestionnaireformat.Thewordingandsequenceofquestionscanfacilitate recall and motivate more accurate responses. Although each questionnaire must be designed with the specificresearchobjectivesinmind,thereisasequenceoflogicalstepsthateveryresearchermustfollowtodevelopa good questionnaire:

Plan what to measure.•Formulate questions to obtain the needed information.•Decide on the order and wording of questions and on the layout of the questionnaire.•Using a small sample, test the questionnaire for omissions and ambiguity.•Correct the problems (and pretest again, if necessary).•

Themostdifficultstepisspecifyingexactlywhatinformationistobecollectedfromeachrespondent.Poorjudgmentand lack of thought at this stage may mean that the results are not relevant to the research purpose or that they areincomplete.Bothproblemsareexpensive,andmayseriouslydiminishthevalueofthestudy.Beforespecificquestions can be phrased, a decision has to be made as to the degree of freedom to be given respondents in answering the question. The alternatives are:

open-endedwithnoclassification,wheretheinterviewertriestorecordtheresponseverbatim;•open-ended,wheretheinterviewerusesprecodedclassificationstorecordtheresponse;or•the closed, or structured, format, in which a question or supplementary card presents the responses the respondent •may consider.

The choice between open- and closed-response questions is not necessarily an either/or distinction. Open-response questions can be used in conjunction with closed-response questions to provide additional information. Using an open-responsequestiontofollowupaclosed-responsequestioniscalledaprobe.Probescanefficientlycombinesomeadvantagesofbothopenandclosedquestions.Theycanbeusedforspecificprechosenquestionsortoobtainadditional information from only a subset of people who respond to previous questions in a certain way. A common exampleofthelatteristoaskrespondentswhochoose“noneoftheabove”afollow-upquestiontoexpandontheiranswer. There are two general purposes for the use of probes in a questionnaire.

Thefirstistopinpointquestionsthatwereparticularlydifficultforrespondents.Adequatepretestingofquestionsreduces this need to use probes. The second purpose is to aid researcher interpretation of respondent answers. Answers to open-response follow-ups can provide valuable guidance in the analysis of closed-response questions. The wording of particular questions can have a large impact on how a respondent interprets them. Even small changesinwordingcanshiftrespondentanswers,butitisdifficulttoknowinadvancewhetherornotawordingchange will have such an effect. Our knowledge of how to phrase questions that are free from ambiguity and bias is such that it is easier to discuss what not to do than it is to give the prescriptions. Hence, the following guidelines are of greatest value in critically evaluating and improving an existing question.

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Is the vocabulary simple, direct, and familiar to all respondents?•Do any words have vague or ambiguous meanings?•Areanyquestions“double-barreled”?Therearequestionsinwhicharespondentcanagreewithonepartofthe•question but not the other, or cannot answer at all without accepting a particular assumption.Are any questions leading or loaded?•Are the instructions potentially confusing?•Is the question applicable to all respondents?•Split-ballot technique. Whenever there is doubt as to the appropriate wording, it is desirable to test several •alternatives.Are the questions of an appropriate length?•

The order, or sequence, of questions will be determined initially by the need to gain and maintain the respondent’s cooperation and make the questionnaire as easy as possible for the interviewer to administer. Once these considerations aresatisfied,attentionmustbegiventotheproblemoforderbiasthepossibilitythatpriorquestionswillinfluenceanswers to subsequent questions. The basic guidelines for sequencing a questionnaire to make it interesting and logical to both interviewer and respondent are straightforward.

Open the interview with an easy and nonthreatening question.•Thequestionnaireshouldflowsmoothlyandlogicallyfromonetopictothenext.•Formosttopicsitisbettertoproceedfrombroad,generalquestionstothemorespecific.•Sensitiveordifficultquestionsdealingwithincomestatus,ability,andsoforth,shouldnotbeplacedatthe•beginning of the questionnaire.

The purpose of a pretest is to ensure that the questionnaire meets the researcher’s expectations in terms of the information that will be obtained. First drafts of questionnaires tend to be too long, often lack important variables, andaresubjecttoallthehazardsofambiguous,ill-defined,loaded,ordouble-barreledquestions.Theobjectiveofthequestionnairepretestistoidentifyandcorrectthesedeficiencies.Theissueofquestionformatisanimportantonewhen constructing a questionnaire for cross-cultural or cross-national research. The researcher may lack experience with purchasing behavior or relevant determinants of response in another country or cultural context. Use of open-ended questions may thus be desirable in a number of situations. Since they do not impose any structure or response categories, open-ended questions avoid the imposition of cultural bias by the researcher.

Furthermore, they do not require familiarity with all the respondents’ possible responses. In addition, differences in levels of literacy may affect the appropriateness of using open-ended questions as opposed to closed questions. Since open-ended questions require the respondent to answer on his or her own terms, they also require a moderate level of sophistication and comprehension of the topic on the part of the respondent; otherwise, responses will not be meaningful. Open-ended questions will therefore have to be used with care in cross-cultural and cross-national research, in order to ensure that bias does not occur as a result of differences in level of education.

When conducting cross-national research, the wording of questions has to be changed according to the country in which the questionnaire is being administered. Certain categories, such as sex and age, are the same in all countries orcultures,andhence,equivalentquestionscanbeposed.Somewhatgreaterdifficultiesmaybeencounteredwithregard to other categories, such as income, education, occupation, or the dwelling unit, since these are not always exactly comparable from one culture or country to another. In addition to the fact that in some countries men may have several wives, marital status can present problems, depending on how the question is put.


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The growing number of cohabitating couples, especially those who are divorced, creates a particular problem in this regard. What is included in the category of income may vary from country to country, and incomes vary considerably withincountries.Themostsignificantproblemsindrawingupquestionsinmulticountryresearcharelikelytooccurin relation to attitudinal, psychographic, and lifestyle data. Here, as has already been pointed out, it is not always clear that comparable or equivalent attitudinal or personality constructs such as aggressiveness, respect for authority, and honor are relevant in all countries and cultures. Even where similar constructs exist, it is far from clear whether they are most effectively tapped by the same question or attitude statement.

5.3 ExperimentationThefollowingdetailouttheintricaciesofthisfield:5.3.1 Experimental ResearchExperimental research involves decision making on three major issues:

What type of experimental design should be used?•Shouldtheexperimentbeperformedina“laboratory”settingorinthe“field”?•What are the internal and external threats to the validity of the experiment, and how can we control for the •various threats to the experiment’s internal and external validity?

Experimental designs can be broadly categorised into two groups, classical designs and statistical designs. The basic difference between these two types of experimental designs is that classical designs consider the impact of only one treatment level of an independent variable at a time. On the other hand, statistical designs allow for examining the impact of different treatment levels of an independent variable and also the impact of two or more independent variables. Experimental research can also be broadly divided into two main categories: laboratory experiments and fieldexperiments.Thefirst,laboratoryexperiments,asthenamesuggests,areexperimentsinwhichtheexperimentaltreatmentisintroducedinanartificialorlaboratorysetting.Inthistypeofresearchstudy,thevarianceofallornearlyallofthepossibleinfluentialindependentvariablesnotpertinenttotheimmediateproblemoftheinvestigationiskept to a minimum.

This is done by isolating the research in a physical situation apart from the routine of ordinary living and by manipulatingoneormoreindependentvariablesunderrigorouslyspecified,operationalised,andcontrolledconditions.Thesecond,fieldexperiments,areconductedinthe“field.”Afieldexperimentisaresearchstudyinarealisticsituation in which one or more independent variables are manipulated by the experimenter under carefully controlled conditionsasthesituationwillpermit.Afieldexperiment is the experimental treatment or intervention introduced in a completely natural setting. The respondents usually are not aware that an experiment is being conducted; thus, the respondent tends to be natural. To design and analyse an experiment, it is necessary that everyone involved in it have a clear idea in advance of exactly what is to be studied, how the data are to be collected, and at least a qualitative understanding of how these data are to be analysed. An outline of the recommended procedure is as follows:

Recognition of and statement of the problem. This may seem to be a rather obvious point, but in practice it is often not simple to realise that a problem requiring experimentation exists, nor is it simple to develop a clear and generally accepted statement of this problem. A clear statement of the problem often contributes substantially to abetterunderstandingofthephenomenaandthefinalsolutionoftheproblem.Choiceoffactorsandlevels.Theexperimenter must choose the factors to be varied in the experiment, the ranges over which these factors will be varied,andthespecificlevelsatwhichrunswillbemade.Thoughtmustbegiventohowthesefactorsaretobecontrolled at the desired levels and how they are to be measured.

5.3.2 Selection of the Response VariableIn selecting the response variable, the experimenter should be certain that this variable really provides useful informationabouttheprocessunderstudy.Choiceofexperimentaldesign.Ifthefirstthreestepsaredonecorrectly,thisstepisrelativelyeasy.Choiceofdesigninvolvestheconsiderationofsamplesize(numberofreplicates),theselection of a suitable run order for the experimental trials, and the determination of whether or not blocking or other randomisation restrictions are involved.

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5.3.3 Performing the Experiment When running the experiment, it is vital to monitor the process carefully to ensure that everything is being done according to plan. Errors in experimental procedure at this stage will usually destroy experimental validity.

5.3.4 Date AnalysisStatistical methods should be used to analyse the data so that results and conclusions are objective rather than judgmental in nature. If the experiment has been designed correctly and if it has been performed according to the design, then the statistical methods required are not elaborate.

5.3.5 Conclusion and RecommendationsOnce the data have been analysed, the experimenter must draw practical conclusions about the results and recommend a course of action. Graphical methods are often useful in this stage, particularly in presenting the results to others. Follow-uprunsandconfirmationtestingshouldalsobeperformedtovalidatetheconclusionsfromtheexperiment.Experimentation is a powerful tool in the search for unambiguous relationships that we hope may be used to make valid predictions about the effects of marketing decisions, and to develop basic theories. The laboratory experiment is the preferred method because of its internal validity; however, because of the acute external validity problems in thelaboratorysetting,managersarereluctanttorelyonit.Unfortunately,thefieldexperimentisbesetbyanumberof problems whose net effect as been to limit the vast majority of marketing experiments to short-run comparisons across stores, home placements of product variations, and so forth.

Relatively few large-scale experiments with social programs, marketing programs, or advertising campaigns are conducted inanygivenyear.Cost and timepressuresare thefirsthurdle.Even“simple” in-store tests requireadditional efforts to gain cooperation; to properly place the display, price, or promotion; to measure the uncontrolled variables; and then to audit the resulting sales differences. The measurement costs alone are often substantial. When large interventions, such as comparing alternative advertising themes in multiple geographic areas, are contemplated, managementmaybeverywarythatthecostswillexceedthebenefits.Thesecostsarelikelytobeconsiderableif any amount of reinterviewing or special manipulation of advertising, product, or other controllable variable is required.Stillanothercostissecurity.Afieldexperimentnaturallyinvolvesexposingamarketingprograminthemarketplace,soitisdifficulttohidefromcompetitors,whoareincontactwiththeirownfieldsalesforce,storepersonnel, research suppliers, and trade sources.

Implementation problems abound in the conduct of experiments. First, it may not be easy to gain cooperation within theorganisation.Regionalmanagersresistproposalstoexperimentwithvaryingthesizeandcallfrequencyofasales force. They do not want to subject their market area to a reduced sales effort. Administrators of social programs may resist efforts to assign people randomly to treatments. They want to decide the assignments according to who canbenefitmostfromtheserviceandwhichserviceismostsuitable.

A second problem to which experiments involving market areas are especially susceptible is contamination, because ofaninabilitytoconfinethetreatmenttothedesignatedexperimentalarea.Buyersfromonegeographicareamayvisitanadjacentareaorreceivemediamessagesthatoverflowfromthatarea.Itisseldompossibletopartitiongeographicmarketareassothatthesalesmeasurementsandtreatmentsexactlycoincide.Afinalcategoryoftheproblemsthatlimittheacceptanceandusageoffieldexperimentsisuncertainpersistencyofresults.Foranexperimentalresulttobe useful, it must hold long enough to be acted on to advantage. The two factors most damaging to an assumption of persistency are high rates of technological, economic, or social change in the market environment, and aggressive competitive behavior. During the experiment the competition may elect to monitor the test independently and learn as much as possible or take unusual action, such as a special consumer promotion, to confound the results. Similarly, when the test is expanded to a regional or national market, the competitors may either do nothing or retaliate.


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5.4 Sampling Fundamentals in Marketing ResearchMarketing research often involves the estimation of a characteristic of some population of interest. For instance, the average level of usage of a park by community residents might be of interest; or information might be needed on the attitudes of a student body toward a proposed intramural facility. In either case, it would be unlikely that all members of the population would be surveyed. Contacting the entire population that is, the entire census list simply would notbeworthwhilefromacost-benefitviewpoint.Itwouldbebothcostlyand,innearlyallcases,unnecessary,sinceasampleusuallyissufficientlyreliable.Further,itoftenwouldbelessaccurate,sincenonsamplingerrors,suchasnonresponse,cheating,anddatacodingerrors,aremoredifficulttocontrol.Apopulation canbedefinedasthesetof all objects that possess some common set of characteristics with respect to a marketing research problem.

A researcher typically is interested in the characteristics of a population. For example, if the proportion of people in a city watching a television show has to be determined, then the information can be obtained by asking every household in that city. If all the respondents in a population are asked to provide information, such a survey is called a census. The proportion of television viewers generated from a census is known as the parameter. On the other hand, a subset of all the households may be chosen and the relevant information could be obtained from that. Information obtained from a subset of the households is known as the statistic (from sample). Researchers then attempt to make an inference about the population parameter with the knowledge of the relevant sample statistic. A critical assumption in the process of inference is that the sample chosen is representative of the population. Estimation procedures and hypotheses tests are the types of inferences that link sample statistics and the corresponding population parameters.

Acensusisappropriateifthepopulationsizeitselfisquitesmall.Forexample,aresearchermaybeinterestedincontactingallthefirmsinthepetroleumindustrytoobtaininformationontheuseofparticularsoftware.Acensusalso is conducted if information is needed from every individual or object in the population. For example, if the researcher is interested in determining the number of foreign students enrolled in a university, it is necessary to get information from all the departments in the university because of possible variations within each department. Further, if the cost of making an incorrect decision is high or if sampling errors are high, then a census may be moreappropriatethanasample.Samplingmaybeusefulifthepopulationsizeislargeandifboththecostandtimeassociated with obtaining information from the population is high. Further, the opportunity to make a quick decision may be lost if a large population must be surveyed.

Also, with sampling, in a given time period, more time can be spent on each interview (personal), thereby increasing the response quality. Additionally, it is easy to manage surveys of smaller samples and still exercise quality control intheinterviewprocess.Samplingmaybesufficientinmanyinstances.Forexample,ifacompanyisinterestedin obtaining reactions to installing a check-cashing operation within the premises, a sample of employees may be adequate.Ifthepopulationbeingdealtwithishomogeneous,thensamplingisfine.Finally,iftakingacensusisnot possible, then sampling is the only alternative. Execution of a research project always introduces some error in the study . . . The total error in a research study is the difference between the true value (in the population) of the variable of interest and the observed value (in the sample). The total error in the study has two major components: sampling and nonsampling errors. If the difference in value (error) between the population parameter and the sample statistic is only because of sampling, then the error is known as sampling error. If a population is surveyed and error is observed, this error is known as a nonsampling error.

Nonsampling errors can be observed in both a census and a sample. Some of the common sources of nonsampling errors include measurement error, data-recording error, data analysis error, and nonresponse error. Because of their nature,samplingerrorscanbeminimisedbyincreasingthesamplesize.However,assamplesizeincreases,thequalitycontroloftheresearchstudymaybecomemoredifficult.Consequently,nonsamplingerrorscanincrease(e.g.,the number of nonresponses can go up), thereby setting up a classic trade-off between sampling and nonsampling errors.Sincenonsamplingerrorscanoccurfromvarioussources,itisdifficulttoidentifyandcontrolthem.Therefore,more attention should be given to reducing them.

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Thefirststepinthesamplingprocessistodefinethetargetpopulation.Thetargetpopulationhastobedefinedinsuch a manner that it contains information on sampling elements, sampling units, and the area of coverage. In order todefinethetargetpopulation,certainsimplerulesofthumbshouldbeadopted,suchaslookingtotheresearchobjectives, reproducibility, and convenience.

The next step is to determine the sampling frame. The sampling frame is usually a convenient list of population members that is used to obtain a sample. A number of biases will result if the sampling frame is not representative of the population. Hence, care should be taken to choose an appropriate list. There is extensive use of telephone directories as a basis for generating lists, but problems such as changed residences, unlisted numbers, and so forth, introduce biases in the sample.

Next, the mechanism for selecting the sample needs to be determined. There are essentially two different methodologies for sample selection. In probability sampling, probability theory is used to determine the appropriate sample. Simple randomsampling,clustersampling,stratifiedsampling,systematicsampling,andmultistagedesignsareamongthevarious available choices in probability sampling. Nonprobability sampling methods, such as judgmental sampling, snowball sampling, and quota sampling, are appropriate in the right context, even though they can be biased and lack precise estimates of sampling variation. Shopping center sampling is used widely, in part because it is relatively inexpensive.Biasesinshoppingcentersamplescanbereducedbyadjustingthesamplestoreflectshoppingcentercharacteristics, the location of the shoppers within the shopping center, the time period of the interviewing, and the frequency of shopping.

Thefourthconsiderationintheprocessisdeterminingthesamplesize.Thefinalconsiderationisnonresponsebias.Nonresponse bias can be reduced by improving the research design to reduce refusals and by using call-backs. Sometimes the best approach is to estimate the amount of bias and adjust the interpretation accordingly. Sampling in international research poses some special problems. The absence of reliable sampling lists brings in a number of biases into the study. Moreover, adopting the same sampling method in different countries may not yield the best results. Even if one adopts the same sampling procedure across all countries, sampling equivalence will not necessarily be achieved.


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SummaryAttitudes• are mental states used by individuals to structure the way they perceive their environment and guide the way they respond to it.The great advantage of an intentions question is that it incorporates information about a respondent’s ability or •willingness to pay for the object, or otherwise take action.The rule may be very simple as when a bus route is given a number to distinguish it from other routes.•Acontinuousratingscalehasinfinitecategories,whereasthenumberofcategoriesinadiscontinuousscale•depends on several factors, such as the capabilities of the scales, the format of the interview, and the nature of the object.The advantage of the single-pole scale over the scale with double poles is ease of construction, as one need not •look for adjectives to achieve bipolarity.Attitude rating scales are widely used to test the effectiveness of advertising copy or compare the performance •of new product concepts and segment markets.Even where similar constructs exist, it is far from clear whether they are most effectively tapped by the same •question or attitude statement.A critical assumption in the process of inference is that the sample chosen is representative of the population.•In selecting the response variable, the experimenter should be certain that this variable really provides useful •information about the process under study.A critical assumption in the process of inference is that the sample chosen is representative of the population.•Even if one adopts the same sampling procedure across all countries, sampling equivalence will not necessarily •be achieved.

ReferencesSchindler, P. S. & Cooper, D. R., 2006. • Marketing Research, 3rd ed., Tata McGraw-Hill Education.Majumdar, R., 2007. • Marketing Research – Text Applications and Case Studies, 5th ed., New Age International.Silk, A. J., • Attitude Measurement in Marketing Research, [pdf] Available at: <http://dspace.mit.edu/bitstream/handle/1721.1/48612/notesonapplicati00silk.pdf>[Accessed7November2012].Jayanti, R. K., McManamon, M. K. & Whipple, T.W., • Attitude Measurement in Marketing Research, [pdf] Available at: <http://www.csuohio.edu/business/academics/mkt/documents/Jayanti_04_JCM_Aging.pdf>[Accessed 7 November 2012].Kale, K., • Attitude Measurement in Marketing Research, [Video Online] Available at: <https://www.youtube.com/watch?v=heaQV-HCtCk>[Accessed7November2012].Gordon, W., • Attitude Measurement in Marketing Research, [Video Online] Available at: <http://www.youtube.com/watch?v=ue0T_33Uc-Y&kw=market+research&ad=12314447849&feature=pyv>[Accessed7November2012].

Recommended ReadingGupta, S. L., 2004. • Marketing Research, 2nd ed., Excel Books India.Hair, J., 2001. • Marketing Research within a Changing Information Environment, 2nd ed., Tata McGraw-Hill Education.Gopal, R., 2007. • Marketing Concepts and Cases, 1st ed., New Age International.

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Self Assessment _____________ are mental states used by individuals to structure the way they perceive their environment and 1. guide the way they respond to it.

Altitudea. Attitudeb. Administrationc. Educationd.

The ____________ or knowledge component2. represents a person’s information about an object.Cognitivea. Cognitionb. Collateralc. Corald.

The great advantage of an ____________ question is that it incorporates information about a respondent’s 3. ability or willingness to pay for the object, or otherwise take action.

intentionala. intuitiveb. interestingc. interrogatived.

Which of the following is to be used with care in cross-cultural and cross-national research?4. Open ended questionsa. Normal questionsb. Closed questionsc. Disclosed questionsd.

The purpose of a pretest5. is to ensure that the questionnaire meets the ___________ expectations in terms of the information that will be obtained.

manager’sa. researcher’sb. leader’sc. customer’sd.

__________ can be defined as a standardised process of assigning numbers or other symbols to certain6. characteristicsoftheobjectsofinterest,accordingtosomeprespecifiedrules.

Distancea. Volumeb. Measurementc. Aread.

A/an __________ assumption in the process of inference is that the sample chosen is representative of the 7. population.

etiquettea. criticalb. normalc. perspectived.


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________ of social programs may resist efforts to assign people randomly to treatments.8. Managersa. Researchersb. Engineersc. Administratorsd.

Afieldexperimentnaturallyinvolvesexposinga_________programinthemarketplace.9. businessa. marketingb. samplec. uniqued.

_________maybeusefulifthepopulationsizeislargeandifboththecostandtimeassociatedwithobtaining10. information from the population is high.

Probabilitya. Samplingb. Meanc. Mediand.

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Chapter VI

International Marketing Research: A Global Project Management Perspective

Aim


explain concept of International marketing research•

elucidate the importance of International marketing research•

explicate marketing research goes global•

Objective


explain framework of International market research•

elucidate design research methodology•

describereportfinding•

Learning outcome


understandingofthespecificresearchobjectives•

identify challenges of conducting international marketing research•

identify how to overcome the challenges•


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6.1 IntroductionAs organisations continue to pursue more global strategies, the need to be able to understand consumers in faraway places is increasing. Marketing research is the primary mechanism through which companies understand their current, as well as potential, customers. As companies contemplate the global marketplace, they must consider how domestic market research differs when conducted in international markets. In an effort to help internal client side marketingresearchmanager’sdesignandimplementimprovedinternationalresearchstudies,webrieflydiscussthe context for international market research and provide a framework for conducting international market research projects. Additionally, we present several factors that should be considered by marketers who engage in global market research studies. These factors represent the variety of challenges that must be addressed in order to conduct research across national borders. Particular attention is paid to the nuances related to primary data collection and questionnaire construction.

6.2 Marketing Research goes GlobalChanges in the global environment are presenting organisations with both new opportunities and challenges. Rapid advancesintechnology,increasinginternationaltradeandinvestment,growingwealthandaffluenceacrosstheglobe, and a convergence of consumer tastes and preferences are compelling businesses to expand their globalisation strategies and tactics. In essence, the global economy is forcing organisations to adapt to a new international order. The process of international marketing research shares many commonalities with its domestic counterpart, namely thefamiliarstepsofproblemdefinition,methodologydesign,fieldwork,andfinalreportandrecommendations.The major differences between the two involve disparities that spring from political, legal, economic, social, and cultural differences across countries, and the problem of comparability of research results.

As organisations become more global in their operations, how will these companies continue to be able to carry on a meaningful dialog with their customers as they become ever more dispersed around the globe? Which countries representthebestopportunitiesfortheorganisation’sproductsandservices?Howwillthesefirmsdesignconsumerbased strategies that are customised for distant international market segments? Market research is the functional link between marketing management and an organisation’s ultimate customer-base. Baker and Mouncey (2003) argue persuasively that continual change and uncertainty in the global market is causing seismic shifts in the role of marketingresearch.Clearly,asglobalisationincreases,firmswillneedtoknowhowtobetterutilisemarketresearchapproaches that enable them to stay close to these worldwide and diverse customer segments.

After brieflydiscussing the context for internationalmarket research,weprovide a framework for conductinginternational market research projects. Our framework is designed to help organisations with in-house market research departments that design and execute primary data collection projects in support of strategic marketing corporate initiatives. These corporate marketing research initiatives include projects requiring the development of target market and marketing mix strategies to support their products and services.

Both corporate and tactical marketing decisions are further complicated by the numerous challenges involved with the cross-cultural context of global business. Our framework is especially well suited to aid on-staff (i.e., in-house) research project managers working for product or service marketers who are looking for comprehensive guidelines to help them design better global research projects in support of their internal executive management clients. Although we realise that our proposed framework is also applicable to external market research vendors, our objective is to provide internal research department managers with a useful tool to design effective international research projects. By highlighting the various challenges involved in conducting international market research, we hope to help in-house marketing research managers design and implement more impactful and effective international research studies. Finally, we also discuss several cross-cultural factors that should be considered by marketers who engage in global market research studies, as these represent challenges that must be addressed in order to conduct effective research across national borders.

Within the broader context of the international market research process, the focus of our paper addresses the nuances related to questionnaire construction and primary data collection issues. We believe these areas are especially critical (i.e. problematic) when designing research projects that cut across national borders. Furthermore, we think the vast majority of clients who utilise in-house market research departments are more often exposed to challenges related

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to questionnaire construction and data collection. Consequently, it is our position that this discussion will provide increasedbenefitsforin-housemarketresearchprojectmanagers.Wedonotdiscussotherresearchmethodologiesincluding qualitative techniques, observational methods, and experimentation, nor do we address in detail the broader issues of scale development, measurement equivalence, sampling, and multivariate techniques. It is our hope thatthisnarrowfocusonthespecificissuesrelatedtoquestionnaireconstructionandinternationaldatacollectionchallenges will provide the reader with a more useful set of tools and guidelines for conducting effective global research projects.

6.3 The Importance of International Marketing ResearchMarket research is the vital link between the organisation and its customers. The objective of sound market research is to interpret consumer behaviour and translate the perspective of key customers into actionable marketing strategies. Without this open dialog with customers, companies are unable to keep in touch with vital consumer behaviour trendsandthemanyinfluencesthataffectthecustomersofanorganisation.Intoday’sconsumerenvironmentofover choice and over-communication, growth can only be realised by organisations that are very skilled at crafting well-targetedstrategiesdirectedatspecificmicro-nichesofthelargermacromarket.Companiesthatgotomarketwithoutfirstuncoveringspecificsegmentneedsandperceptions risk facing themonumentalcostofmarketingfailure. With new consumer product launches typically costing $25 million or more, the risk of not incorporating consumer behavior into marketing strategy is considerable. Since the mid-1990s, the international research business has grown tremendously. In 1995, the top 25 global market research organisations had aggregate revenues of only $5.7 billion, and 45% of their revenues came from outside the companies’ home countries. By 2004, revenues had grown 133%, to $13.3 billion, while out-of-home-country share grew to 67%.

Asillustratedbythesefigures,itisclearthatspendingoninternationalmarketresearchprojectsisontheriseinthe U.S. and other countries. It has been estimated that it costs six times as much to attract a new customer as it does to keep a current customer. This fact demands that organisations increasingly must stay in touch with their best customers. The most actionable method employed by market-driven organisations to keep pulse with their valued customers is the effective use of market research. Only by having an open dialog with their customers can companies learn about the subtle shifts in buying preferences that, without proper management, ultimately lead to company and/or brand defection. As more organisations pursue global business strategies, they will require and demand international sources of market information.

In order to compete effectively in the 21st century, these businesses will need specialised, targeted information about buyers in dispersed international markets. Connell (2002) argues that, in the business-to business market, thereisamplejustificationforconductinginternationalmarketresearchinsupportofthedesign,execution,andinterpretation of a wide variety of global marketing strategies. As illustrated by the examples offered in this article, research tactics routinely used in the United States are much more problematic when deployed in developing foreign markets. Companies that pursue multi-domestic and global marketing strategies face a wide variety of strategic questions relating to foreign market entry.

According to Rydholm (1996), prior to pursuing international marketing strategies, managers should ask:Have international sales been increasing as a percentage of overall revenue?•Are international markets growing faster than domestic markets? •Does the organisation have the same competitive position outside the U.S.? •Are the fundamental needs of foreign customers known? •What is the interaction of the four P’s in foreign markets? •Can the Internet help with research design?•

The answers to these and other questions can help organisations prioritise their need for international marketing research. While it makes sense for increasing numbers of companies to go global, making the correct decisions regarding target markets, brands, and other strategic marketing mix variables is both challenging and problematic. Furthermore, the Internet may not necessarily be the optimum medium for conducting international market research projects, despite its rapid growth and acceptance by certain consumers.


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6.4 Think Globally, Learn LocallyAs stated by Craig and Douglas (2005), effective and timely market research is an essential tool for developing strategy in a rapidly changing global marketplace. The authors contend that international market research is increasingly needed to address a wide variety of global marketing challenges including correctly positioning new products, avoiding product formulation errors, accurately understanding cultural challenges, identifying appropriate promotion messages, being cognisant of geographical differences, and examining language and translation problems. In order to make effective marketing strategy decisions, marketers who are increasingly drawn to the global marketplace because of the opportunity it represents need a reliable and valid source of information. Craig and Douglas (2005) discuss three major information needs relative to international market research. These represent:

Information needed for international market entry. This includes information concerning macro issues (e.g., the •political, legal, and regulatory environment of each foreign country) and micro issues (for example, product or service sales potential, market growth rate, and competitive intensity).Information needed for local market planning. These issues primarily surround strategies and tactics related to •developing the appropriate marketing mix.Information related to global rationalisation. This involves evaluating and integrating data previously collected •in order to monitor changes in the international environment. To accomplish these critical information objectives, marketers require an international market research framework.

6.5 The International Market Research FrameworkThrough the use of marketing research practices, international product and service providers can develop the most effective international marketing strategies that will lead to sustainable competitive advantage.

Fig. 6.1 illustrates the international market research process within the context of the four familiar stages of the domesticresearchprocess:settingobjectives,designingmethodology,collectingdata,andreportingfindings.Thefour traditional stages of the market research process are shown providing the larger context for cross-cultural market research. Although these stages are not unique to the international setting, they provide the backdrop which highlights the potential challenges posed by international research designs.

For example, information requirements at the corporate, regional, and local levels will likely vary widely between differentcountries.Tacticaldecisionsthatmayhelptheproductorserviceinonecountrymaynotfitwithinthebroader strategic goals of the organisation. Similarly, examining previous data and collecting secondary data may bemuchmoredifficult insomecountries,dependingonthestateof themarketresearchinfrastructurepresent.Additionally, within the methodology step, the unit of analysis has four different levels ranging from local to global. Clearly, the unit of analysis varies between traditional studies and projects conducted across international boundaries. It is much easier to design a questionnaire focused on a single local market, as opposed to a study that represents a globalunitofanalysis.Further,conductingfieldworkacrosscountrylinesposesmanychallenges.Analysingdata,incorporatingnewknowledge,andmodifyingbusinessstrategiesaremoredifficultandtimeconsumingwhentheunit of analysis includes a larger worldwide context. Each step of the traditional research process when applied to theinternationalsettingholdsapotentialforsignificantchallenges,whichwehopetohighlight.

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Research Objectives Methodology Collect Data Report/Recommendations

Information Requirement/Problem

Definition

Management Level: CorporateRegionalLocal

Decision Level:StrategicTractical

Choose unit of Analysis

Global RegionCountryLocal Implement

research design:

Conduct Fieldwork

Design Primary Methodology:

Sampling PlanMeasurement Equivalence Instrument Research Technique

Data analysis Technique

Examine Previous Data

Analyse Data

Modify Business Strategies

Add New Knowledge to

Database

Collect Secondary Data

Information Feedback Loop

Fig. 6.1 Information Feedback Loop

6.6 Setting Research ObjectivesLike its domestic counterpart, the international market research process begins with a clear understanding of the specificresearchobjectives.Determiningwhatinformationisrequired,andatwhatlevel,isthenecessaryfirststep.As in domestic research, information may be required for decision making at different levels in the organisation, from the corporate level relating to strategic issues, down to local operating units where concerns are often more tactical. Projects at the management level cover broad issues such as brand awareness and tracking, while those at the decision making level may involve more tactical issues like local pricing, packaging, and other marketing mix decisions. If the research problem is not clearly articulated, the research collected will not adequately answer the specificproblem.Unfocusedresearchstudiesrarelyandonlythenbyaccident,relatetotheManagementproblemunderconsideration.Anotherflawofstudiesconductedwithoutcriticalthinkingconcerningobjectivesisthattheresulting research design may well elicit unusable information.

For example, a project with the objective of obtaining customer impressions on a corporate merger will not elicit information on why customers are defecting to competitive brands. International marketers should also consider any previous data that the organisation may have. New data should always be considered within the context of existing information. Moreover, secondary data is often used as a supplement to primary data, so its usefulness should be considered early during the research objectives stage. The international environment, however, makes these activities moredifficulttoconduct.Ingivencountries,previouslycollecteddatamaynotexist;further,secondarysourcesmay not be as prevalent in developing parts of the world as compared to more Westernised markets.


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6.7 Designing Research MethodologyThe second major step in the international market research process involves designing the methodology. Whether domestic or international in focus, this is the critical step of any research project. In order to construct the most effective methodology, researchers must have a broad perspective of the many methodological options available. Variations range from primary to secondary research, qualitative and quantitative, experiments, test markets, observations, andsurveys,justtonameafew.Intheinternationalcontext,thespecificunitofanalysisiscriticalandrelatestothe research design stage. For example, corporate decisions would require more of a global or regional approach; in contrast, tactical marketing mix decisions would require more of a local unit of analysis.

Designingtheprimarymethodologyisspecificallyrelatedtohowthedatawillbecollectedfromrespondentsandanalysed.Inthispaper,weemployanarrowdefinitionofmethodologyasitrelatestothespecificdatacollectionmethod that will be utilised (for example, in-person, telephone, mail, Internet survey). The sampling plan and measurement equivalence concepts are also much more complicated in an international market research environment. This critical stage in the process requires adequate time and attention to address the many details that are involved with international projects. Instrument translation, primary research method (for example, in-person, telephone, mail, or Internet survey), and data analysis technique issues pose many challenges for international market researchers due to their varying levels of presence, acceptance, and utilisation across worldwide markets.

6.8 Collecting Data and Reporting FindingsOnce the appropriate data collectionmethodology is selected, fieldworkmust be conducted.Essentially, thisexecutestheresearchdesigndevelopedduringstage2.Thenextstepinvolvesanalyzingthefindingsandprovidinga management report, along with a summary of the strategic recommendations. The new knowledge should be incorporatedintotheorganisation’sdatabaseandbusinessstrategiesshouldbeappropriatelymodified.Thisprocessrepeats itself as needed through the information feedback loop to address future information requirements. The method described is a very straightforward and common procedure in the United States, Western Europe, and other developed countries. The market research industry, which was conceived and matured in the U.S., today generates $16.1 billion annually, with $6 billion coming from the United States, $7.6 billion from the European Union, and $2.5billionfromtheAsiaPacificregion.Withtotalmarketresearchexpendituresof$20.15billionglobally,itiseasy to see that the three major developed regions account for the vast majority of international market research expenditures.

The presence of an adequate market research infrastructure offers a distinct advantage to developed countries and rapidly growing markets. Characteristics comprising market research infrastructure consist of a variety of tools, data sources, methodology options, and the like, all of which help in executing market research projects. The availability of individual geographic market data and the widespread use of huge databases, however, are primarily Western phenomena. Moreover, the widespread prevalence of secondary data in North America and Europe is vastly superior to that which is available in many developing foreign countries. The resource of more than 4000 full service market research suppliers provides another North American advantage. When companies consider conducting market research outside North America, the availability of many of these tools, techniques, and secondary information sources comprising the market research infrastructure may be severely restricted.

6.9 Challenges of Conducting International Marketing ResearchDue to the complexities of conducting and managing market research projects across national boundaries, many factors exist that, if not adequately addressed, can negatively impact project management and, consequently, project deliverables. These factors can impact any and, for that matter, all of the traditional market research steps discussed previously. For example, varying cultural norms across different countries or continents may impact research objectives,aswellasposesignificantchallengesinthedatacollectionphaseoftheproject.Similarly,languagebarriers have a considerable impact on data collection and, ultimately, incorporating the new learning into the organisationformaximumbenefit.

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Next, we discuss several important considerations related to questionnaire construction and data collection methods that internal research managers must consider as they design and implement global research studies for their organisations. Failing to adequately understand and address these issues puts internal researchers at odds with their top management constituencies and risks conducting costly research projects that do not add value and improve thefirm’scompetitiveadvantage.

6.10 Cultural ChallengesConducting market research in an international market requires a great deal of new learning. From a managerial perspective, this includes a more comprehensive understanding of native culture. Cultural elements such as social institutions, gender roles, language, religion, aesthetics, education, and time orientation are closely intertwined with national culture, and have a major impact on the acceptability and adoption of new products and services. The effect of culture is multifaceted in the sense that cultural values that are important to one group of people may mean little to another. Cultural differences deeply affect adoption of products and services and other forms of market behavior. Clearly, cultural forces have taken on strategic importance that cannot be ignored when marketing new and/or existing products and services.

Social factors embody a culture’s fundamental organisation, including its groups and institutions, its system of social infrastructure, and the process by which resources are distributed. Naturally, social structure affects market research decisions including the cost of conducting the research, reaching the target markets, collecting the data, etc. The target market’s knowledge of and familiarity with product service offerings also plays a critical role in conducting research. Market research specialists demand certain levels of educational and technological skills. Although a country may have a huge population, only a small segment of that population may be equipped with the knowledge necessary to employ research tools either at work or at home. In a technologically sophisticated domestic market, businesses have more opportunities to modify existing products/services to include new technological designs and features, and develop entirely new products/services and technologies. Research companies operating in a sophisticated market,wherethecustomergroupislargeandprofitable,havetheadvantageovercompaniesoperatinginmarketsthat lack such sophistication.

6.11 LanguageNow that market research is being conducted around the globe, researchers must take language and cultural factors into account when designing questionnaires. Language represents the most obvious factor that makes international market research so challenging. While many middle and upper management executives worldwide have some command of the English language that does not mean that English must be employed in conducting all research. To make matters even more complicated, variations within the same language may exist. For example, English speakers in the U.K. and America have long complained that they are separated by a common language. Consider a scenario which occurred after London-based ICI purchased Cleveland, Ohio-based Glidden Paint Company in the late 1980s. Upon inquiring about a business request that he had submitted to his new bosses in the U.K., John S.Dumble,PresidentofGlidden,wastoldthathisrequesthadbeen“tabled.”Alarmed,Dumblesaid:“Look,thisissomethingIneed.It’simportant,orIwouldn’thaveaskedforit.Youreallyshouldreconsider.”ItwasatthispointthatDumblelearnedthat,inEngland,“tabled”meansputthroughforapproval,notconsignedtooblivion,asintheAmerican vernacular (Susan Corbett, personal communication, September 9th, 1999).

6.12 TranslationThe most common problem in questionnaire design involves translation into other languages. A questionnaire developedinonecountrymaybedifficulttotranslatebecauseequivalentlanguageconceptsdonotexist,orbecauseof differences in idiom, vernacular, and phrasing (i.e., syntax). For example, the concepts of uncles and aunts are not the same in the U.S. as in India; there, the words for aunt and uncle are different for the maternal and paternal sides ofthefamily.AndwhileSpanishisspokeninbothMexicoandVenezuela,researchershavefoundthatthetranslationoftheEnglishterm“retailoutlet”worksintheformercountry,butnotinthelatter.Apparently,Venezuelansinterpretthe translation to refer to an electrical outlet, an outlet of a river into an ocean, and the passageway into a patio.


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In order to ensure that information is conveyed as intended, international marketing researchers often have questionnaires back translated. Back translation is the process of translating questionnaires from one language to another and then translating them back again by a second, independent translator. The back translator is often a person whosenativetongueisthelanguagethatwillbeusedforthefinalquestionnaire.Thiscanrevealinconsistenciesbetween the English version of the questionnaire and the translation, for correction if necessary. For example, in oneinternationaladvertisingresearchproject,theadvertisingslogan“outofsight,outofmind”wasbacktranslatedas“invisiblethingsareinsane”.

6.12.1 SyntaxAspreviouslymentioned,syntaxiscloselyrelatedtolanguage.Infact,syntaxspecificallyreferstowordphrasingand sentence construction. For example, simply translating English questionnaires into German is very problematic. While the resulting product may look German, it’s not really very German. The same is true of the reverse process (from German to English): it looks English, but isn’t. The syntax is what makes the difference.

6.12.2 Cultural NormsFollowinglanguage,themostsignificantvariableinsuccessfulforeignmarketresearchisculturalnorms.Thesenormsareveryinfluentialforces,andcanrepresentthedifferencebetweensuccessfulproductintroductionandfailure. Unfortunately, cultural norms are usually very subtle rather than blatant and obvious, which makes them hard to discern and detect. Consider the case of a U.S. ketchup company that, after learning ketchup was not available in Japan, attempted to market their product there. Rather than take the time to question why ketchup wasn’t already available in the country and investigate the situation through international market research, the large, well-known U.S. manufacturer hurriedly shipped a large quantity of its popular, name-brand ketchup to Japan, fearing any delay would permit its competition to spot the opportunity and capture the market.

Had market research been conducted by the U.S. Company prior to product introduction, it would have revealed that soy sauce is the preferred condiment in Japan. Ignoring important cultural norms has caused other problems for international marketers. For example, Chase and Sanborn met resistance when it tried to introduce its instant coffee intotheFrenchmarket.InthetypicalFrenchhome,theconsumptionofcoffeeplaysaverysignificantrole.Sincethe preparation of real coffee is a ritual in the life of the French consumer, they will generally reject instant coffee because of its impromptu characteristics. Additional stumbling blocks may be numerous and varied. For instance, in many Middle–Eastern countries, women would never consent to being interviewed by a man; furthermore, the idea of discussing grooming behavior and personal care products with a stranger (i.e., moderator) would be highly offensive.

6.12.3 Time ZonesTimezonespresentdifficultiesinconductinganytypeofbusinessinforeignmarkets,andmarketresearchisnoexception.Duringfieldwork,marketresearchersfrequentlyfinditnecessarytocommunicatewiththefacilitiesthathavebeenhiredtoconducttheactualinterviews.Differingtimezonesinothercountriesimpactprojectcommunicationandultimately,projecttiming.Moredaysarerequiredtofieldagivenresearchprojecttoallowforcommunicationsthat may need to occur half-way around the world. Even the time of day matters in places like Japan, where business-to-businessinterviewingisverydifficulttoconductduringbusinesshours.BecauseJapaneseemployeesaresoloyalto their employers, they hesitate to devote time to anything other than their immediate work efforts while in the office.Aswell,employersbelievetheyoweabsolutecommitmenttotheiremployeeswhileonthejob.

6.12.4 Foreign HolidaysThe United States has a list of approximately 12 standard holidays per year. Other countries have different lists, which can be much longer and certainly differ from the American calendar. Holidays are yet another factor that can add to the total time frame required to complete an international research project. According to Rydholm (1996), prior to starting research, clients should always check the holiday schedule of the country in which they are working. Nearly every Monday is a holiday somewhere in the world.

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6.12.5 Sampling Issues/Sampling FrameConsider the process of conducting marketing research in China. China has a total population of 1.2 billion, 350 million of which live in urban areas of 622 cities and scores of smaller towns. Of the cities, only 32 have populations of at least one million, while 42 have populations between 500,000 and one million, and the remaining 548 have populations of less than 500,000. Since almost no small towns or rural areas are included in market research projects, what constitutes a nationally representative sample of the Chinese market? Considering the framework in Fig. 6.1, the unit of analysis in a complex single county like China varies widely between national, regional, and/or local. Adding additional countries only makes the project more challenging for internal market research managers to administer. A logical means of reaching the largest sample possible, including individuals who don’t live in major population centers, involves interview by telephone or computer.

Unfortunately, technological capabilities are not equal across countries or regions. For example, in Germany, telephone penetration did not reach the 80% level until the mid- 1980s, long after that milestone had been reached in the United States. Today, less than 10% of all households in India have telephones, and telephone penetration in Brazilislessthan50%inlargecities.Consideringthelowcomputerusageinthesenations,thesamplerepresentationproblem is even more dramatically exacerbated when using Internet-based samples. Unless and until these nations increase their overall computer and Internet capacity, using the Internet to conduct international market research is not going to result in sound customer-based business strategies.

6.12.6 Native InterviewersTo facilitate the already complicated communication process, using native interviewers for international research projects allows multi-national clients to exert a form of quality control. Moreover, it is a matter of courtesy that the local respondents should be able to speak with interviewers in their own language. Many nationalities, such as the French, are often offended by non-native researchers. While advisable overall, recruiting native interviewers can be problematic in countries and regions where the literacy rate is low, like rural China and India.

6.12.7 Questionnaire LengthAs consumers worldwide become increasingly sensitive to being interviewed, participation refusal rates keep trending upward.OfChina’smajorcities,refusalratesareestimatedat32%inGuangzhou,22%inBeijing,and10%inShanghai. A key driver of refusal rates is questionnaire length. After approximately 20 minutes, most respondents become fatigued with the process and terminate the interview. This factor is exacerbated in international studies, as different languages can shorten or lengthen the amount of time it takes to get through a questionnaire. For example, translated into Italian, a 20 minute American questionnaire will last only approximately 18 minutes. Translated into French, the same questionnaire will take 22 minutes. The difference in duration is attributable to the subtle nuances of both languages.

6.12.8 IncentivesThe use of incentives in market research has been debated for as long as research has been executed. The common criticism of the practice contends that by paying respondents for their opinions, an inherent bias is introduced. This is more complicated in the international setting, where in some cultures incentives are required to procure participant cooperation.Forexample,drinkingandsocialisingareexpectedaspartoftheresearchexperienceinBrazil.Inothercultures, however, incentives of any kind are regarded as insulting to the respondents.

6.12.9 Measurement IssuesIn international market research, it is critical to establish the equivalence of scales and measures used to obtain datafromdifferentcountries.Oneofthesignificantissuesthatmustbedealtwithearlyintheinternationalmarketresearch process is the equivalence of data. This involves three considerations. First, it has to be ascertained whether the constructs being studied are equivalent. In other words, are the same phenomena being studied in both countries? Second, the equivalence of the measures of the concepts under study has to be determined. This means that the phenomena are being measured consistently in each country. Finally, the equivalence of the sample being studied in each country or culture must be considered. The issue here is that the samples used in each country are equivalent to each other. These considerations involve substantial measurement issues that are increasingly critical


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inaninternationalenvironment.Theconceptsofreliability,definedasconsistencyovertime,andvalidity,whichisconcerned with what the instrument is actually measuring, are important to any market research effort, especially those that cross national boundaries.

6.12.10 Market Research InfrastructureMediaavailability,Internetpenetration,qualitycontrol,andtheoverallmarketresearchinfrastructuresignificantlyimpact the success of international research projects. Where little or no media exists, these options are no longer open to international researchers. Widespread print and broadcast media options and extensive databases are generally a Western advantage. Further, Internet penetration remains skewed to males under age 40 with above average education and household income. Until its usage rate increases to a point that approximates a broader cross section of customers, the Internet cannot be considered a viable primary market research instrument. This is especially true in the international setting.

6.12.11 Currency FluctuationsDoing business around the world always involves the risk of changes in a particular country’s currency. Market researchfirmsarealsoimpactedbythesefluctuationsbecauseofthenumerousfieldservicesthatareusuallyhiredtocompletearesearchassignment.Tofinishagivenproject,severalcountriesmightbeinvolved.Forexample,eachspring and fall, IBM conducts a brand tracking study in 14 languages in 27 countries. At any time, one or more of these countries will experience unstable currency conditions, affecting the lead research supplier.

6.12.12 Data Collection ChallengesTheprocessofmanagingvendorsintheinternational,ratherthaninthedomestic,contextismuchmoredifficult,time consuming, and expensive. While taken for granted that mall intercept methodology, scanner data, and reliable postal delivery are all available in the U.S., this assumption is not true for many other parts of the world. Unreliable mail service in developing countries makes conducting international mail surveys problematic. Access issues in terms of locating the appropriate person and gaining their cooperation to participate in a market research study are also heightenedintheinternationalcontext.Additionally,respondentandvendorconfidentialityandtrustareimportantconsiderations in the global context. For example, a research study examining the functioning of a sovereign nation orinter-companyconflictsmusthaveanassuranceofconfidentiality.Theseissuesaremorechallengingintheglobalenvironment, where other barriers like language and culture play a larger role.

6.12.13 Legal IssuesLegal and privacy restrictions pose unique challenges in the international research arena. European countries with strictprivacyregulationscanpotentiallyshutdownmarketingactivitiesthatprofileorcollectpersonalinformation.Gainingaccesstospecificrespondentscanalsobeproblematicincertaincountries.Furthermore,theChinesearemonitoringquestionnaireconstructionandeventheapprovalofthefinaldata.ThisisindirectconflictwiththeAmerican approach of non-disclosure of proprietary client results.

6.13 Guidelines for ManagersCompanies that already are, as well as those that plan to become, global marketers must look closely at the world marketplace to identify global opportunities. Consequently, in order for organisations to evaluate their numerous international opportunities, they must develop an expertise in conducting global marketing research studies. This expertise can be effectively translated into a competitive advantage. As companies continue to seek competitive advantagesacrossnationalboundaries,beingcognizantofthevarietyofcross-culturalmarketingresearchchallengesasdiscussed in thispaperprovidesanessential ingredient to thefirm’sultimate success.Clearly, internationalmarketing research provides information about foreign consumers and critical information regarding the global marketplace. The purpose of our paper has been twofold. First, we provided a framework for international market research; second, we discussed several critical challenges to illustrate the issues involved when companies conduct international marketing research projects in support of their brand initiatives. The framework was provided within the context of the traditional four steps of the research process.

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Within this broader context, we highlighted the subtle differences between domestic and global marketing research design. While the steps of the market research process are familiar to many managers, overlaying the international perspective creates a variety of important and unique data collection challenges, as we have indicated. To help internal research managers’ design and implement more impactful and effective global research studies, we reviewed several factors that must be considered prior to conducting research across foreign markets. Client side market researchmanagersdesigningprojectstosupportuppermanagementinitiativeswillencountersignificantdifficultyunless these data collection issues are addressed. As relevant and timely information about customers increasingly becomes the foundation of competitive advantage, managers will need to critically review their international research programs.

In order to take full advantage of international growth opportunities over the long term, companies looking to the globalmarketplaceneedresearchthatidentifiescustomerbehaviorsandpotentialpositioningstrategies.Toassurethattheirprojectsarecontributingtotheoverallcompetitiveadvantageofthefirm,researchmanagersmustbeawareof the nuances involved in data collection across cultures. As we suggested, research managers must think globally and act locally by developing research projects that rationalise global expansion, identify international market entry options, and provide a basis for implementing a foreign marketing mix strategy.

The positive result of this mindset will be improved information about global customer segments, leading to improved performanceandincreasedcompetitiveadvantageforthefirm.Duetothecomplexitiesinvolvedwhenconductingmarket research across national borders, in addition to paying close attention to the data collection and questionnaire design problems we have outlined, research managers may also want to keep the following in mind:

Consider utilising foreign stakeholders to help with potential cultural, legal, and/or government restrictions on •market research studies. There is no substitute for trusted, on-the-ground contact sources to provide context on awidevarietyofcountry-specificfactorsthatcouldhaveanegativeeffectoninternationalresearchstudies.Consider using a single research vendor familiar with the international marketplace. Multi-country projects are •inherentlydifficulttomanage,solooktoasingleconsistentandexperiencedvendorforguidance.Allow more time to plan and execute an international study. Projects crossing country boundaries require •extended design, implementation, and follow-up efforts. Conduct research studies in markets similar to the home country prior to conducting research in new and unfamiliar •parts of the developing world. Newcomers to the international market research arena should take small steps in familiar markets to provide a solid foundation prior to expanding into new, unfamiliar markets. Supplement custom market research insights with as much secondary information about foreign markets as •available. Because the data collection issues in global market research are so challenging, utilise any and all relevant secondary information sources to improve insights gained from custom studies conducted in foreign markets. Internal market research managers who are aware of the unique context of international market research willbebettersuitedtodesignandimplementprojectsthatcontributetotheirfirm’scompetitiveadvantageinthe marketplace. Additionally, paying close attention to the challenges we have discussed will result in market research studies that are both more impactful and more often utilised by their senior management clients.


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SummaryMarketing research is the primary mechanism through which companies understand their current, as well as •potential, customers.In an effort to help internal client side marketing research manager’s design and implement improved international •researchstudies,webrieflydiscussthecontextforinternationalmarketresearchandprovideaframeworkforconducting international market research projects.Changes in the global environment are presenting organisations with both new opportunities and challenges.•Our framework is designed to help organisations with in-house market research departments that design and •execute primary data collection projects in support of strategic marketing corporate initiatives.Theprocessofmanagingvendorsintheinternational,ratherthaninthedomestic,contextismuchmoredifficult,•time consuming, and expensive.Due to the complexities of conducting and managing market research projects across national boundaries, many •factors exist that, if not adequately addressed, can negatively impact project management and, consequently, project deliverables.Timezonespresentdifficultiesinconductinganytypeofbusinessinforeignmarkets,andmarketresearchis•no exception.The use of incentives in market research has been debated for as long as research has been executed.•A key driver of refusal rates is questionnaire length. After approximately 20 minutes, most respondents become •fatigued with the process and terminate the interview.Market researchfirms are also impactedby thesefluctuations becauseof the numerousfield services that•are usually hired to complete a research assignment.Tofinish a givenproject, several countriesmight beinvolved.

ReferencesSchindler, P. S. & Cooper, D. R., 2006. • Marketing Research, 3rd ed., Tata McGraw-Hill Education.Majumdar, R., 2007. • Marketing Research – Text Applications and Case Studies, 5th ed., New Age International.Silk, A. J., • International Marketing Research, [pdf] Available at :<http://dspace.mit.edu/bitstream/handle/1721.1/48612/notesonapplicati00silk.pdf>[Accessed7November2012]Jayanti, R. K., McManamon, M. K. & Whipple, T.W., • International Marketing Research, [pdf] Available at: <http://www.csuohio.edu/business/academics/mkt/documents/Jayanti_04_JCM_Aging.pdf> [Accessed7November 2012]Kale, K., • International Marketing Research, [Video Online] Available at: <https://www.youtube.com/watch?v=heaQV-HCtCk>[Accessed7November2012]Gordon, W., • International Marketing Research, [Video Online] Available at: <http://www.youtube.com/watch?v=ue0T_33Uc-Y&kw=market+research&ad=12314447849&feature=pyv> [Accessed 7November2012]

Recommended ReadingKumar, V., 1999. • International Marketing Research, 1st ed., Prentice Hall.Samuel, C. & Douglas, S. P., 2009. • International Marketing Research, 3rd ed., Wiley.Jr.Hair,J.,Wolfinbarger,M.,Bush,R.&Ortinau,D.,2009.• Essentials of Marketing Research, 2nd ed., McGraw-Hill/Irwin.

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Self AssessmentWhich of the following is the primary mechanism through which companies understand their current, as well 1. as potential, customers?

Marketing processa. Marketing researchb. Business strategyc. Business behaviourd.

Changes in the global environment are presenting organisations with both new opportunities and _________.2. challengesa. changesb. targetsc. surroundingd.

The objective of sound market research is to interpret ___________ and translate the perspective of key customers 3. into actionable marketing strategies.

business strategya. consumer behaviorb. market strategyc. marketingd.

Companies that pursue ___________ and global marketing strategies face a wide variety of strategic questions 4. relating to foreign market entry.

multi taska. multi-domesticb. multi utilityc. multi marketingd.

Theprocessofmanagingvendorsintheinternational,ratherthaninthedomestic,contextismuchmoredifficult,5. time consuming, and ________.

cheapa. relevantb. expensivec. irrelevantd.

Conducting market research in an international market requires a great deal of new ___________.6. applicationa. requirementb. learningc. developmentd.

The use of incentives in market research has been debated for as long as research has been _______7. relieveda. executedb. explicatedc. exploredd.


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The most common problem in questionnaire design involves ______ into other languages.8. transitiona. transpositionb. translationc. transparencyd.

______ and privacy restrictions pose unique challenges in the international research arena.9. Illusiona. Illegalb. Legalc. Publicd.

The framework was provided within the context of the traditional __________ steps of the research process.10. twoa. threeb. fourc. fived.

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Chapter VII

Leadership and Professional Skills

Aim


explain the concept of management attitudes•

elucidate the key attributes or characteristics of responsible leadership•

explore the skills and knowledge required to integrate corporate responsibilities •

Objectives


defineleadershipskills,managementskillsandreflexiveabilities•

explicate embracing diversity and managing risks•

enlist attributes of responsible leadership integrity•

Learning outcome


understand the concept of balancing local and global perspectives•

identify the essence of meaningful dialogue and language•

describe the corporate response•


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7.1 Introduction: Management AttitudesThere has been much research into management views towards corporate responsibility and business ethics, with many studies providing a strong focus on attitudes and values. However, the research team felt it important to conduct some primary research among managers considering their opinions on what drives responsible leadership. A short electronic survey was distributed by email to a sample of managers drawn from contacts within the network of the European Academy of Business in Society (EABIS). The survey was also posted on the EABIS and Ashridge web sites, and distributed through relevant electronic networks such as CSR Chicks and CSR Blokes. The overall responses totaled 108. Because of the way in which the electronic questionnaire was distributed, it is not possible to assess the effective response rate – however it is less than 5% of those who were directly emailed the questionnaire. The characteristics of the respondents are shown below.

The starting point for analysing the data generated by the survey is to examine whether there is consensus on the nature of leadership qualities that are likely to support corporate responsible behaviour within organisations. The survey invited respondents to assess the importance of certain key attributes or characteristics of responsible leadership. They were presented with a total of 30 attributes which were ordered into seven categories as follows:

Acting with integrity•Caring for people•Demonstrating ethical behaviour•Communicating with others•Taking a long-term perspective•Being open minded•Managing responsibly outside the organisation•

The full list of the 30 attributes that are contained within these seven categories is outlined in of this report. It is worth noting that these attributes, which were derived from an extensive review of the literature, are a mixture of both personal qualities (such as honesty and trustworthiness) and demonstrable behaviours (such as a management style of empowerment rather than control). Respondents were asked to rate each these different attributes on a scale of 1 to 5 (where 1 is very important and 5 is of little or no importance).

Acting with integrity•Caring for people•

There follows a group of attributes that are of importance to between one quarter and one half of all respondents. Withinthisgroupitisworthnotingonesignificantdistinctionamongrespondents–youngermanagersaremuchmore likely to consider being open-minded as a key characteristic of responsible leadership.

Acting with integrity •Caring for people •Demonstrating ethical behaviour •Communicating with others •Taking a long-term perspective •Being open minded •Managing responsibly outside the organisation•

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In addition, it is interesting to note that relatively few respondents to this survey felt that managing responsibly outsidetheorganisationisofsuchimportancerelativetotheotherattributesidentified.However,thisbroadbrushrankingdoesdisguisesomeimportantdifferencesacrossthe30detailedcharacteristicsidentifiedinthesurvey.Thefollowingattributeswererankedasthe‘topten’fromthecompletelistof30identifiedandwereconsideredtobe“veryimportant”bywelloverhalftherespondents(inthislisttheyareshownindescendingorderofimportance):

Respect for employees at all levels (rated as very important by 77%)•Honest and trustworthy (76%)•Will not be complacent and assume things can’t be improved (72%)•Commitment to the growth and development of employees (66%)•Won’t let unethical behaviour go unchallenged (63%)•Being honest and open with staff in the organisation (61%)•Questioning business as usual by being open to new ideas, challenging others to adopt new ways of thinking •(60%)Respect for diversity and equal opportunities for all (58%)•Taking a strategic view of the business environment (57%)•Ethical behaviour embedded in personal actions and day-to-day behaviour (57%).•

Giventherelativelysmallsamplesizeitisperhapsnotsurprisingthattherewasahighdegreeofconsensusabouttherelativeimportanceofthesekeyattributesofresponsibleleadership.Despitethis,somestatisticallysignificantdifferencesdidemergeacrossrespondentsfromdifferentagegroups.Thefindingisconsistentamongthissampleof managers, younger people rate attributes like honesty and trustworthiness as less important that their older peers. Thereismuchliteratureonthissubjectwhichconfirmsthatlessexperiencedmanagers(andhenceoftenyoungermanagers)dotendtobe‘lessethical’intheirapproachtobusinesscomparedtooldermanagers.Thefindingsfromoursampleofmanagerstendtoconfirmthisviewandraiseimportantquestionsaboutsomeoftheinherentdangersin fast tracking younger, high potential managers to positions of seniority.

Unlessspecificactionistakentoaddresstheissue,such‘highfliers’mightmissoutonthedirectexperienceofmanagement that seems to instill a greater respect for the importance of certain qualities of responsible leadership in business.Beforeleavingthisissueofdefiningresponsibleleadership,itisworthnotingthatrespondentswereinvitedtoputforwardtheirowndefinitionsoftheconcept.Intotal,some68respondentsaddedtothelistofattributes.Ananalysisofthisdatashowsthatmanyresponsesreframedtheconceptsidentifiedinthequestionnairebutdescribedthem in slightly different terms. Some of the new issues or attributes that did emerge from the data related to:

Theimportanceoffinancialandcommercialsuccesstoresponsiblebusinesspractice•Theneedforaspecificfocusontheenvironmentalimpactsandperformanceoforganisations•A greater commitment to work-life balance and recognising an organisation’s responsibilities to the families of •employees (not just the employees).While these additional observations are relevant and interesting, it could be argued that they apply more to •organisational behaviour rather than the attributes of individual managers.

As well as examining the management attitudes those contribute to responsible leadership, the questionnaire survey also explored how corporate responsibility is integrated into a company’s culture. The vast majority of organisations represented in this survey have integrated responsible leadership into their vision and value statements. Almost two thirds of organisations integrate it into HR systems including recruitment, induction and training and development. Justoverone-thirdhaveintegrateditintopayandrewardsystemsorbusinessmetrics.Thesedatatendtoconfirmour direct experience of where companies are in the process of integrating corporate responsibility into mainstream business practice. While many have made progress in addressing the issues at the level of policies and values, relatively fewer have begun to address the challenge of developing new business metrics or performance measures that explicitly account for the social and environmental impacts of the business. To a certain extent this is indicative of the experience of the eleven companies who participated in the in-depth interview stage of the research which is reported in the next Section of this report.


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7.2 Skills and KnowledgeIn this Section we concentrate on the data from the interviews and consider in more detail the skills and knowledge requiredtointegratecorporateresponsibilityintomanagementpractice.Thefirstquestiontoaskis,towhatextentare companies integrating corporate responsibility into existing management competency frameworks? The short answer to this question is – not much. Most of the companies involved in this research are still exploring ways and means of integrating a consideration of environmental and social factors into the way managers are developed. They recognise that building responsible business practice into the mainstream of management development is a long-term task that requires a process of cultural change. Given that different organisations are at different stages on this journey, it is perhaps not surprising that these companies have integrated corporate responsibility in different ways.

Reflectingthefindingsfromtheelectronicsurvey,somecompaniesrefertotheircodeofbusinessprinciples;othershighlight standards of business conduct; while only small minorities have begun to integrate corporate responsibility competencies into leadership frameworks (and of these not all are prepared to publish these in the public domain). One example of a company that has gone some way to integrating corporate responsibility competencies is Solvay. Ofthethirtycompetenciesidentifiedintheir“CompetenciesDictionary”,fivearelinkedtothecompany’svalues(customer care, empowerment, ethical behaviour, respect for people and teamwork) and one additional competency concerns cultural sensitivity. Another company that has made progress in integrating corporate responsibility into management development processes is Shell they have done this through the creation of what they describe as their sustainabledevelopmentlens.ThestartingpointforShellhasbeentoarticulateacleardefinitionofwhatsustainabledevelopment means for the company. They describe this as:

Integrating economic, environmental and social factors in strategic decision-making and the management of •daily operationsAddressing short-term priorities with full consideration of longer-term needs•Actively seeking out and valuing the views of others (engaging) before• making decisions.

Building on this expression of what sustainable development means for Shell, the company has developed a Sustainable Learning Framework which seeks to develop people through three related channels: Communicating basic awareness and understanding of sustainable development. Training and learning – developing working knowledge and skills Beyond training – building mastery and advocacy among leaders to have the breadth of vision and external mindset to embrace the concept of sustainable development. So while some companies are making some progress in this area, most have yet to integrate corporate responsibility into existing competency frameworks. However, it is interesting to note that several companies are using a competency approach to identify and develop top talent. The following description of Dexia’s talent management process is indicative of many of the companies involved in this research. In order to identify and develop talents, the Dexia Corporate

University bases its action upon a series of tools. For example, as a must to move towards an executive position, the DEAL – Dexia Assessment of Leadership – programme aims at identifying high potential executives on the basis of a set of competencies that are common to the whole Group. This set of references is distributed into six orientations deemedessentialforDexia’sstrategy,i.e.customer-focus,efficientimplementationofchange,HRdevelopment,ability to add value through innovation, to promote best practice and to have a common vision. Dexia recognises that their approach to corporate responsibility is strongly driven by the business imperative to respond to demand for Socially Responsible Investment (SRI) opportunities – the company’s starting point is exploiting this product opportunity by providing greater added value for clients. In order to develop an SRI product stream Dexia had to build an in-house expertise in this area. The required knowledge and skills are seen to be:

Well founded and balanced judgement•Open mindedness•Critical thinking•Integrity•Understanding of stakeholders•Long-term perspective•

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Diversity•Team driven people•

Dexia is more interested in these qualities/skills and less interested in the pre-existing knowledge of potential employees. They are deliberately looking to build diversity in the SRI team by recruiting people from a variety ofdisciplines.Thatsaid,thecompanydoesrequirepeoplewhohaveacertaindegreeoffinancialknowledgeandacumen–understandingwhatinvestmentisabout.Theyalsoneedpeoplewho“likenumbers”,areITliterateandareflexible(recognisingthatjobrolescanchangequitequicklyinthissector).Microsoftisanotherexampleofacompanythatusesaleadershipcompetencymodeltodefinethestrengthsanddevelopmentneedsofcurrentandfutureleaders.TheMicrosoftmodelcomprisesfiveclusterswithelevencompetences.Althoughthereisnoexplicitlink to corporate responsibility some of these competencies that are relevant include:

Principledleadership(includingexecutivematurityandconfidence)•Facing complexity, pressure and uncertainty•Understanding own and others behaviour•Consistency with Microsoft’s values•Cross-border collaboration creating one Microsoft•Passion for technology•Passion for customers and partners•

Finally, Cargill has developed a leadership model (the Heart of Leadership) which contains four components:People’s behaviour•Knowledge(jobspecificandtechnicalexpertise)•Ability to learn•Ability to execute•

Again, while this leadership model does not explicitly include competencies related to corporate responsibility, there are three core components of the model that are of relevance to responsible decision making – these are integrity, conviction and courage. In this way, the company sees that there is a clear link between corporate responsibility, the core values of the company and its leadership framework. Indeed, the organisation is clear that this implicit linkisastrengththecompanydoesnotseektoisolatecorporateresponsibilityasaspecificcompetencybutaimsto integrate it into the core of their day-to-day business.

The previous section examined the extent to which competencies related to responsible business behaviour feature in currentframeworks.InthisSectionweconsiderwhatintervieweesidentifiedastherelevantcompetenciesnecessaryto integrate corporate responsibility into mainstream business practice. Interviewees were invited to consider a number of ‘critical incidents’ in their own organisation’s recent past. These incidents might be examples of business decisions that successfully took account of the wider social or environmental responsibilities of the organisation. In addition,intervieweesidentifiedrecentincidentswherethecompanyhadfailedtotakeintoaccountbroaderissuesofcorporateresponsibility.Ineithercase,theaimwastoidentifythosecompetenciesthatwereinfluential(eitherthrough their presence or absence) in the decision making process. From an analysis of this data it is possible to draw up a generic list of competencies that can be said to describe responsible business behaviour.

Understanding the competing demands of different stakeholder groups•Understanding how the core business activities create opportunities for other actors in society and how the •company can make a contribution to societyUnderstanding the social and environmental risks and opportunities of the company and its industry sector•Understandingtheinstitutionaldebateontheroleandlegitimacyofthefirm•


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7.2.1 Skills

Well founded and balanced judgement•Critical thinking•Team player•Creativity, innovation and original thinking•Communicating with credibility•Business acumen•Listening skills•Managing stakeholder network relationships•Emotional intelligence•

7.2.2 Attitudes

Honesty and integrity•Long-term perspective•Open mindedness•Appreciating and embracing diversity•Conviction and courage•The drive to contest resistance•The capacity to think outside the box•

While the development of a generic competency framework is a useful starting point, it does not take us far in identifying precisely what it is that managers need to do differently – either in the skills they develop or the knowledge they need to bring to an issue – in order to integrate corporate responsibility into their day-to-day business decision making. In order to answer this question it is necessary to re-examine the nature of the competency framework as we have outlined it thus far in this report. Combining the wealth of qualitative information gathered from the interviews,togetherwiththequantitativedataderivedfromthesurvey,itbecomesclearthatdefininganddescribingcorporateresponsiblebehaviourrequiresaslightredefinitionofthecompetencyframework.Ratherthanthinkingofskills,knowledgeandattitudes,itismoreusefultodiscussleadershipqualities,managementskillsandreflexiveabilities.

7.2.3 Leadership QualitiesIn understanding responsible business behaviour, the starting point remains the leadership qualities that are in thedomainofpersonalattitudesandbeliefs.Thesearevalues-drivenandalmostbydefinitionrelatetothemoralaspects of decision making – distinguishing between right and wrong, good and bad. As such, they comprise those characteristics of the individual such as honesty and integrity. They are the deep seated personal qualities that change and develop only slowly over time.

7.2.4 Management SkillsManagement skills can be seen as the antithesis of leadership qualities they are amoral, normative and entirely instrumental. They describe those aspects of management practice that are the tangible manifestation of socially and environmentally responsible business behaviour. They include expertise in areas such as stakeholder dialogue and building partnerships. Unlike leadership qualities, these management skills are amenable to being taught and developed over the short term.

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7.2.5 Reflexive AbilitiesThereflexiveabilitiesidentifiedthroughthisresearcharethesynthesisofleadershipqualitiesandmanagementskills.Theyareanalogoustothecorecharacteristicsidentifiedinpreviousresearchreferredthisreport.Reflexiveabilities are a mixture of skills, attitudes and knowledge sets and should be considered as the key competencies required to integrate social and environmental considerations into core business decision making. The following Sectiondescribesthefiveinter-relatedreflexiveabilitiesidentifiedbyintervieweestakingpartinthisresearch.

The opening paragraphs of this report suggested that dealing with complexity is the key challenge facing business organisations today. This message was reinforced time and again by the interviewees involved in this study. This notion of dealing with complexity was often taken as a short-hand metaphor for integrating social and environmental considerations into the business decision making process.

An analysis of the data generated by the interviews suggests that developing these new perspectives on business behaviourrequiresactionandunderstandingonfiveinter-relatedfronts:

Systemic thinking•Embracing diversity and managing risk•Balancing global and local perspectives•Meaningful dialogue and developing a new language•Emotional awareness.•

Eachofthesefiveareasisconsideredinmoredetailbelow.

7.2.6 Systemic ThinkingDealing with complexity requires the ability to think strategically, to understand the bigger picture and to appreciate the diverse networks in which an organisation operates. At its simplest, systemic thinking concerns the ability to understand the interdependency of systems across the business and between the business and society. Interviewees recognised this as a vital ability if managers are to appreciate the complexity of issues such as global warming. They suggested that systemic thinking requires a deeper understanding of both internal organisational relations and external social, economic, environmental and cultural dynamics. To be successful, managers are required to undertake a key strategic shift in the way that they view the world – they need to recognise that the company is not operating in a closed system. In addition, they are required to interpret the signals given by actors in the market and must be able to respond appropriately.

Several interviewees drew a distinction between systemic thinking and an appreciation of complexity that is required intraditionalmanagementdisciplinessuchasfinanceorengineering.

More traditional management disciplines often call for a form of analytical thinking that seeks to understand complex situations by breaking them down into their constituent parts and analysing the impact of individual components on the problem being addressed. It was argued that the business education system is well placed to develop skills in understanding the complexities of narrow functional specialism’s by developing strong analytical thinking. However, encouraging an appreciation of social and environmental complexity (which is at the heart of systemic thinking) is simply not amenable to this type of analysis. It requires a new form of complex reasoning. Systemic thinking moves beyond the consideration of individual components and requires an analysis of the interrelations across the whole system, understanding how things interact with one another at the broadest possible level.

7.2.7 Embracing Diversity and Managing RiskThe second reflexive ability is the competence to embracediversity.Clearly at one level this is simply aboutbuildingcorporateteamsthatreflectthediversityofthesocietiesinwhichtheyoperate.Althoughthisisconsiderednecessary,itisnotsufficientformanagerstobetrulyresponsive.Diversityinitsbroadersenseisseenastheanswerto complexity. Interviewees were aware that heterogeneous groups (whether based on gender, race, culture or other aspect) are better able to use their differences to appreciate the complexity of the situations in which they operate.


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It was suggested that the wrong way to deal with complexity is either to deny its existence or increase its amplitude by dealing with issues using homogenous groups. There was a strong consensus that individuals and organisations need to respect diversity by acknowledging it, building bridges across different groups and seeking common ground without forcing consensus respecting difference is vitally important in acknowledging diversity. Overall, the message was that the business decision making process needs to structure relations that will maximise the exchange of ideas and learning across different groups – inside and outside the company. Beyond this interpretation of diversity, interviewees suggested that in order to deal with complexity, managers need to be aware of potential risks and opportunities, have the ability to spot issues and recognise the legitimacy of other view points.

It was suggested by several interviewees that since their organisations are subject to a huge variety of different and competing demands, managers should always try to maintain an open perspective to be prepared for any foreseeable (and sometimes unforeseeable) contingencies. One of the key abilities that distinguish responsible business behaviour isthewillingnesstobeopentonewpossibilities.Manyofthecriticalincidentsidentifiedintheresearchprocesscame“outoftheblue”.Therewerenowarninglightsoralarmbellsthatalertedmanagerstowhatwasabouttohappen. As a result, interviewees frequently spoke of the need to encourage managers to take the extra investment (in time and resources) to work out what might happen in any given situation. There was a strong call for the need to create an external mindset in managers to make them more sensitive to potential risks and opportunities.

7.2.8 Balancing Local and Global PerspectivesThethirdreflexiveabilityconcernsthecapacitytoseeandappreciatetheimpactoflocaldecisionsontheglobalstage.By their very nature, the organisations involved in this research are largely decentralised companies that operate in many different countries dealing with a huge diversity of cultures and values around the world. At the same time, they are often striving to operate according one set of values and beliefs. In itself, this is simply a reiteration of the oft repeated dilemma of a company trying to be both global and local. This raises issues of how to maintain a global frameworkofvaluesandatthesametimerespectlocaldiversity.Italsorelatestodifficultiesinensuringconsistentoperational standards while encouraging innovation and entrepreneurship in operating units.

However, most pertinent to the issues raised in this study, interviewees felt that the biggest challenge understands where the limits of corporate responsibility lie. Part of this challenge is a willingness to take action on issues for which the company is considered to be accountable; even though it has no direct responsibility as individual organisation examples of such issues might include climate change, access to medicines, or addressing social inequality. One company’sresponsetothesechallengesistolookattheroleofbusinessinsocietythroughthelensof“spheresof influence”and“spheresof interest”.According to thismodel,abusinessneeds toknowandunderstand theboundariesofits“sphereofinfluence”.Itmustactivelyengagewithstakeholderinthisdomaintoensureitretainsits licence to operate and innovate.

However,themodelalsorecognisesthatanorganisationwillhaveawiderbutmorediffuseimpactacrossits“sphereofinterest”.Atthislevelthecompanyneedstobeawareofsocial,environmental,politicalandeconomicdimensionsof its business decisions without necessarily having to develop close links with those impacted by its actions. Using this simple model helps managers understand the nature of the situation in which the company is operating and beginstoclarifytheinterdependenciesbetweenthespheresofinfluenceandinterest.Itwasstressedthatmanagersneed to look at the situation not simply from the inside out (the business perspective) but also need to consider the situation form the outside in (the societal perspective). Other interviewees suggested that this approach to developing a local and global understanding needs to be supplemented with a better appreciation of the consequences of one’s actions – both at the corporate and individual levels.

Thisrequiresanabilitytopause,reflectandthinkthroughtheissuesinamoreconsideredmanner.Onepersondescribed this as a matter of determining what is important rather than what is urgent. For others, this means developingthereflexiveabilitiesofinsightfulnessandshrewdnessinidentifyingthekeyissuesthatarerelevanttothe corporate responsibilities of the business. Clearly this resonates with the systemic thinking required to understand the dynamics of the business and the complex environment in which it operates. It also complements another core ability (discussed below) of appreciating the potential and actual role of external stakeholders. In essence, much of the discussion centered on the ability to make strategic choices on appropriate courses of action by better understanding the interdependencies between local actions and global issues.

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7.2.9 Meaningful Dialogue and LanguageThe fourth area of interest is the ability to maintain meaningful dialogue with others by listening, inquiring and respondingappropriately.Oneintervieweeprovidedspecificexamplesofhowthisapproachhaschangedthedecisionmakingprocess.Hedescribeditasmovingfromtakingactionwhereone“decides,announcestheoutcomeanddefendsthedecision”toaprocessof“dialogue,decidingandimplementing”.Thissimpledescriptionisapowerfulshort-hand portrayal of a much more comprehensive method of stakeholder engagement. Others described this as the capacity to hold productive conversations seeking out and valuing the views (including the hopes, fears and emotions) of others before you make a decision.

The value in developing new forms of meaningful dialogue is that they can offer the opportunity to explore assumptions, ideas and beliefs that inform individual and organisational behaviours and actions. In this way, companies and their stakeholders can begin to explore how cultural differences between groups can cause clashes often without an appreciation of what is occurring. Importantly, interviewees suggested that dialogue with stakeholders should not be concerned with deliberately trying to move toward a predetermined goal or achieve an unsatisfactory compromise.

In discussions with one outside the formal research process, the following model emerged as a useful framework for thinking about the different aims and outcomes that might be achieved in resolving tensions between business andsociety.ThismodelcapturesfivepotentialoutcomesofnegotiationsbetweentwopartiesAandB.Inthefirstposition, the issue is resolved to the satisfaction of party A with little or no regard given to the viewpoint of party B. In the second outcome, the opposite happens – the issue is resolved to the satisfaction of party B with little or no regard given to the viewpoint of party A. The third potential outcome is a decision that fails to meet the aspirations orexpectationsofbothpartiesnooneissatisfiedwiththeoutcome.Veryoften,traditionalpatternsofnegotiationendupatposition4withacompromisesolutionthatpartiallysatisfiesbothpartiesbutfailstomeettotallytheaspirations of either A or B. The purpose of meaningful dialogue should be to try to reach an outcome at position 5 – devising a solution that both parties consider to be satisfactory.

Clearly, a model of this nature does not deal with all the complexities of dialogue and negotiation, especially when organisations are often dealing with multiple stakeholders that have competing demands. However, it does serve to illustrate the point that was made by several of the interviewees’ one of the key advantages of building external connections and getting engagement from others is to provide an external perspective into the business. Only when the organisation has a proper understanding of this external perspective can it begin to consider how negotiations might result in a movement towards position 5 in the model above.

Thisdoesnotdiminishthedifficultiesofdecidingwhicharetheappropriateissuestheorganisationshouldaddress,and which are the legitimate external viewpoints to be heard. Even once this has been achieved there remains the task of convincing others within the organisation of the need to respond. Indeed, interviewees highlighted this as a hugely important aspect of building meaningful dialogue understanding how things get done in the company in order to effect internal change. This was seen as a vitally important ability for integrating corporate responsibility into an organisation. Managers need to understand the company’s business model and the context in which it operates. They havetodeveloptheskilltoknowhowthebusinessoperatesandinfluenceactionwithintheexistingframeworkswhileoperatingon“theedgeofthebusiness”.

Again, this ability is related to the systemic thinking that develops an understanding of the intersection between business and societal issues by being able to distinguish between the potential indirect impacts of the company and the core contribution it can make to society. Closely related to the process of meaningful dialogue is the need to create a new language for corporate responsibility. Many of the interviewees expressed the view that it is vitally important for a company to be able to develop a clear and consistent articulation of what corporate responsibility means for the company at the global and local level.


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Manythoughtthatdevelopingthisvisionofwhatcorporateresponsibilitymeansrequiresthedevelopmentofa“newlanguage”thatmovesbeyondtraditionaldescriptionsofbusinessexcellenceintermsoffinance,production,outputsand service excellence. Part of this need to create a new description of corporate responsibility is the necessity to developalanguagethatspeakstothefinancialcommunitythatshowstheeconomicvalueofconsideringsocialandenvironmental issues. Another dimension is to create a language that will allow senior managers at board level to discuss issues of social and environmental risks and opportunities something which most interviewees feel rarely happens. There was a view expressed that without the development of a new language, managers will remain reluctant to step outside the boundaries of traditional management thinking as they do not have the vocabulary to express the new ideas and concepts associated with the changing role of business in society.

7.2.10 Emotional AwarenessThefinalareamentionedbymanyinvolvedinthisresearchwasthatofemotionalawarenessdescribedvariouslyas empathy, perception, curiosity and the ability to use the right-hand side of the brain in decision making. One interviewee described this simply as the ability to understand the broader implications of decisions and actions on others. The capacity to identify the inter-relationship between emotions, thoughts and behaviour is considered a vital skill to operating successfully in today’s business environment. Interviewees observed that all too often reactions to business decisions are not based on rational analysis but on feelings and perceptions. Frequently, when going through thedecisionmakingprocessmanagersdescribe their“thoughts”onbusiness issues inentirelyrationalterms ignoring the fact that their viewpoint is not only the product of conscious intellect but is also colored by their feelings, emotions, intentions and desires.

Hence, it is important that managers have the ability and willingness to recognise that business decisions are not alwaysdrivenbyaprocessofeconomicrationality.Indeed,weallknowthatthe“businesscase”forcorporateresponsibilityisnotsufficienttochangetraditionalmanagementbehaviours.Rathermanyleadersinthisareaalsodraw on broader arguments in making the case for a corporate response to long-term issues of social justice and environmental protection. Another element of emotional awareness is a tolerance of unusual approaches. Integrating corporate responsibility into an organisation requires managers to go beyond the well known (and well worn) analysis of business issues.

In order to deal with uncertainty and complexity they need to adopt unorthodox approaches to addressing the competingdemandsdifferentstakeholdergroupsplaceonthebusiness.Afinalaspectofemotionalawarenessrelatedto the characteristics of managers themselves interviewee’s spoke of the need to develop and enhance personal qualities of reticence and sensitivity. This often revolved around the recognition that in today’s rapidly changing business environment one must accept that it is not always possible to be in control or to have perfect knowledge of the outcomes of one’s decisions. While this was not put forward as a reason for abdicating responsibility, it was argued that a successful manager must retain a sense of humility a characteristic in sharp contrast to the model of heroic leadership.

In this Section we have moved from discussing competencies as a combination of knowledge, skills and attitudes to concentrateonthefivereflexiveabilitiesthatmanyoftheindividualsinvolvedinthisresearchdescribedasdefiningcorporate responsibility behaviour. We have seen how the companies involved in this research have described these reflexiveabilitiesasbeingdistinct fromleadershipqualitiesandmanagementskills.Thereflexiveabilitiescanbe seen as the key competencies required integrating social and environmental considerations into core business decision making.

However,inconsideringthisprocessofintegrationitisimportanttobearinmindthreeissues.Thereflexiveabilitiesidentifiedbythisresearchprocessarehighlygenericastheyreflecttheexperiencesofelevencompaniesoperatinginverydifferentcircumstances.Eachorganisationwillneedtoexplorewhichreflexiveabilitiesarerelevanttotheirsituation.Someaspectsofthereflexiveabilitiesreflectcurrentgoodpracticeinleadershipdevelopment.Again,eachorganisationwillneedtoexploretowhatextentelementsofthereflexiveabilitiesmightalreadybepartofanorganisation’s competency framework.Leadership qualities comprise individual characteristics and personal qualities that change and develop only slowly over time. Management skills describe those aspects of business practice that are the tangible manifestation of socially and environmentally responsible business behaviour and are amenable

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tobeingtaughtanddevelopedovertheshortterm.Theresearchsuggeststhatdevelopingthereflexiveabilitiesidentifiedabovemightbemoredifficulttoachieve,butdoingsowillhaveasignificantimpactonindividualandorganisational approaches to integrating social and environmental considerations into core business decision making. InthefinalSectionweconsiderhowcompaniesarebeginningtointegratethesereflexiveabilitiesintothetrainingand development initiatives they provide for their current and future leaders.

7.3 The Corporate ResponseInthisfinalSectionweconsiderhowcompaniesarerespondingtothechallengeofintegratingthesereflexiveabilitiesinto the way they train and develop their current and future leaders. In order to do this, it is necessary to consider how corporateresponsibilityinteractswithcorporateculture.Wethengoontoconsiderthespecificactionsofseveralofthe organisations involved in this research. Finally, this report concludes with some observations relevant to those outside the corporate world that are charged with executive development particularly business schools.

In the introduction to this report we made it clear that the primary focus of the research is on the area of individual management behaviour we are seeking to identify the competencies required to develop a decision making process that embraces the complexity of today’s business environment. However, during the interview process it became clear that one cannot ignore the relationship between corporate responsibility and corporate culture. In discussions with interviewees several suggested that the process of developing responsible leaders sets in chain a powerful dynamic between what a company says about corporate responsibility, the way in which it internalises these issues into policies and systems, and the impact this has on the organisational culture. Although the different elements of this model are closely inter-related, a useful starting point for understanding this dynamic is to consider what the researchteamhastermedthe“CRNarrative”.

Essentially, these are the stories that are told by those within the organisation, about the organisation, that describe what corporate responsibility or sustainable development means for the company. Very often, this CR Narrative is informed by the myths and legends that are built up about the way in which a company responds to critical incidents. Thesecriticalincidentsarethosesignificanttimeswhenacompany’sreputationisputontheline.Oftenthismightmean the company is potentially exposed to reputational damage because of a breach in environmental standards, poor performance in health and safety, concerns about product safety, or allegations of mistreatment of workers in the supply chain. These are the times when the media, campaigning organisations and the wider society actively challenge the social or environmental performance of the company. However, critical incidents are not always of this nature sometimes they are very positive experiences. The companies involved in this research told us about other occasions (often less visible to the outside world) where managers had acted in a way which demonstrated an acute understanding and awareness of the organisation’s broader responsibilities. Such incidents included product recalls, potential investment decisions that had been rejected because of social or environmental concerns, innovations in environmental performance and so on. Whenever these critical incidents occur, those inside the organisation tend to ask themselves three questions:

How did the company get into this situation?•How did the company deal with it?•What does this incident say about the way the company discharges its responsibilities?•

Clearly this process is both neither formal nor systematic it is simply part of the way in which employees’ understanding of the nature and character of the company is formed and shaped. However, there is a more formal element to this process and many interviewees suggested that the CR Narrative can be supported and promoted through internal and external communications (newsletters, web sites, the speeches of senior management) that explicitly aim to describe what corporate responsibility means for the company. Once these CR Narratives are established they become part of the process that informs the development of a company’s policies and procedures in such areas as business principles; health, safety and environment; corporate governance; audit and assurance; measurement and reporting on social and environmental performance; and so on.


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These policies and procedures help those within the organisation to respond to the pressures of dealing with social and environmental challenges. They are designed to inculcate a greater awareness of management accountability for corporate responsibility. In so doing, they both help to reinforce the CR Narrative and systematise the lessons learned from the experiences of the critical incidents. A further important element of an organisation’s systems and structures is its approach to HR – encompassing every aspect from employee selection to executive development. This facet of corporate activity is clearly central to the challenge of developing responsible business leaders. Several interviewees described how those in the corporate responsibility function were increasingly seeking to work with HR professionals in order to make sense of how corporate responsibility can inform management development systems.

There was much discussion about the way in which the CR Narrative might be integrated in recruitment processes; selectionassessments;jobprofiles;performancemanagementsystems;andmanagementdevelopmentprogrammes.These three elements of the model impact each other and in turn all three impacts on the organisation’s culture. The interesting challenge for corporate responsibility professionals is the extent to which the CR Narrative is able to influencethedominantcultureofthecompany.Thisissueisattheheartofthedebateonmainstreamingcorporateresponsibility–itwillremainperipheralunlessitisabletoinfluencethedominantculture.Theliteraturearoundcultural heterogeneity suggests that a dominant organisational culture will allow the development of different value systems or sub-cultures separate from the mainstream culture of the organisation.

However, the dominant culture will always try to determine how a sub-culture survives and thrives (or perishes). Different relationships between the two cultures can develop including:

An orthogonal (or independent) relationship where both co-exist with neither the dominant nor the sub-culture •havingmuchinfluenceontheotherA subservient relationship where the sub-culture is allowed to continue only as long as it does not seriously •challenge the dominant cultureA consenting relationship where the sub-culture is tolerated in order to serve the broader purposes of the •dominant culture.

Many of the interviewees were clear that the way in which the traditional business culture of their own organisation interacts with the sub-culture of corporate responsibility is critical to the success of initiatives in this area. Some of thepositiveexamplesofintegratingcorporateresponsibilityintothedominantorganisationalculturearereflectedin the way in which current and future leaders are being trained and developed – these are discussed below. Having begun to identify the core competencies relevant to corporate responsible behaviour, interviewees described how they are seeking to integrate these into management training and development. The following short paragraphs give aflavourofthewiderangeofactivitiescurrentlybeingundertaken.

InCargill,aspartofthecompany’sprogrammeof“TransitioningintoLeadership”participantsspendtwodaysworking on community projects. This involves direct experience of working with those individuals and groups in an environment very different from the normal business world often having to deal with acute social issues with very little resources. Several organisations (including Cargill and Shell) help managers to develop a strategic vision by taking a real issue that has been discussed by the senior management team and testing out responses and reactions in discussions with the next tier of managers. Usually this involves designing exercises based on real investment decisions to enable people to practice applying principles of corporate responsibility and explore for themselves how business value can be generated. In this way, they are encouraged to think outside their direct area of responsibility, take a long-term perspective and develop a broader understanding of the issues facing the organisation.

Another approach (used by Unilever and others) is to expose senior managers to places in the world that are very different to their home base. For some companies serving in a managerial role as an ex pat is a requirement for progression up the corporate hierarchy. Interviewees suggested that this experience helps people to develop an understandingofthecomplexitiesofoperatingaglobalbusinessbyseeingfirst-handthesocialandenvironmentalrealities of operating in developing economies. One of the approaches to integrating corporate responsibility in Johnson & Johnson is through the development of country champions identifying people across the business that

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are knowledgeable about the issues and are charged with implementing local initiatives and raising awareness and understanding among their colleagues. This network of people is supported by biannual development initiatives that bring people together, often with external experts and advisors, to share experience across the company and explore latest trends and developments in the pharmaceutical sector and beyond.

7.4 Attributes of Responsible Leadership IntegrityA high level of ethical awareness/moral reasoning won’t let unethical behaviour go unchallengedHonest and trustworthy willing to explore ethical dilemmas .A willingness to take ethical action without a clear pictureofthefinaloutcome

7.4.1 Open-MindednessWilling to act on criticism from inside or outside the organisation Will not be complacent and assume things can’t be improved Questioning business as usual by being open to new ideas, challenging others to adopt new ways of thinking

7.4.2 Taking a Long-term PerspectiveA belief that bottom line success can be achieved in an ethical way Does not focus exclusively on cost and budgets Recognising that business does have responsibilities to the broader society Understanding the role of each player in society - government, business, trade unions, NGOs and civil society Taking a strategic view of the business environment

7.4.3 Demonstrating Ethical BehaviourEthical behaviour embedded in personal actions and day to day behaviour Willing to take the organisation beyond minimum legal standards Willing to be a public role model for ethical behaviour Able to change beliefs of followers consistent with own high values

7.4.4 Care for PeopleCommitment to the growth and development of employees Respect for employees at all levels Respect for diversity and equal opportunities for all won’t make unrealistic demands on self and others, e.g. not working all hours a management style of empowerment rather than control

7.4.5 CommunicationsListen to others with respect for diverse views A broad model of communications - a two-way dialogue with staff being honest and open with staff in the organisation A belief in the principles of accountability, e.g. measuring and publicly reporting on company progress with regard to social and environmental issues

7.4.6 Managing Responsibly Outside the OrganisationTreating suppliers fairly .An interest in the impact of the business on surrounding local communities Building relations with external stakeholders, engaging in consultation and balancing demands Building capacity and external partnerships and creating strategic networks and alliances.


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SummaryThe starting point for analysing the data generated by the survey is to examine whether there is consensus on the •nature of leadership qualities that are likely to support corporate responsible behaviour within organisations.Beyond training – building mastery and advocacy among leaders to have the breadth of vision and external •mindset to embrace the concept of sustainable development.The approach to corporate responsibility is strongly driven by the business imperative to respond to demand for •Socially Responsible Investment (SRI) opportunities – the company’s starting point is exploiting this product opportunity by providing greater added value for clients.Leadership model does not explicitly include competencies related to corporate responsibility, there are three core •components of the model that are of relevance to responsible decision making – these are integrity, conviction and courage.The development of a generic competency framework is a useful starting point, it does not take us far in •identifying precisely what it is that managers need to do differently – either in the skills they develop or the knowledge they need to bring to an issue – in order to integrate corporate responsibility into their day-to-day business decision making.Management skills can be seen as the antithesis of leadership qualities they are amoral, normative and entirely •instrumental.Thereflexiveabilitiesidentifiedthroughthisresearcharethesynthesisofleadershipqualitiesandmanagement•skills.Reflexive abilities are amixture of skills, attitudes and knowledge sets and should be considered as the•key competencies required integrating social and environmental considerations into core business decision making.Systemic thinking moves beyond the consideration of individual components and requires an analysis of the •interrelations across the whole system, understanding how things interact with one another at the broadest possible level.Thesecondreflexiveabilityisthecompetencetoembracediversity.Diversityinitsbroadersenseisseenas•the answer to complexity.Thethirdreflexiveabilityconcernsthecapacitytoseeandappreciatetheimpactoflocaldecisionsontheglobal•stage.The fourth area of interest is the ability to maintain meaningful dialogue with others by listening, inquiring and •responding appropriately.The emotional awareness described variously as empathy, perception, curiosity and the ability to use the right-•hand side of the brain in decision making.The interesting challenge for corporate responsibility professionals is the extent to which the CR Narrative is •abletoinfluencethedominantcultureofthecompany.

ReferencesKush, B. D., 2009. • Auditing Leadership: The Professional and Leadership Skills you Need, illustrated, John Wiley & Sons.Morrison, M., 1993. • Professional Skills for Leadership, illustrated, Mosby Publishers.Rounds,.S.I.S., • Leadership and Professional Skills, [pdf] Available at :<http://www.thoracic.org/assemblies/rcmb/career-talk-book/resources/toolkit-general/professional-skills-leadership.pdf>[Accessed7November2012].Kanu, A.C. & Kanu, F.D., • Leadership and Professional Skills, [pdf] Available at: <http://geniusone.com/pdf/EnhanceYourLeadershipSkills.pdf>[Accessed7November2012].Martin, A.P., • Leadership and Professional Skills, [Video Online] Available at: <http://www.youtube.com/watch?v=MrFqQzCTFbM>[Accessed7November2012].Fernandez,A.R.,• Leadership and Professional Skills, [Video Online] Available at: <http://www.youtube.com/watch?v=HqptGGaKC00>[Accessed7November2012].

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Recommended ReadingRitchie, A., 2007. • Continuing Professional Development, illustrated, Walter de Gruyter Publishers.Gupton, S. L., 2009. • The Instructional Leadership Toolbox, 2nd ed., Corwin Press.Lussier, R.N. & Achua, C. F., 2009. • Leadership: Theory, Application & Skill Development, 4th ed., Cengage Learning.


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Self AssessmentThe 30 Key attributes of responsible leadership is ordered into _______ categories.1.

sixa. sevenb. eightc. nined.

Which one of the following is not a characteristic of responsible leadership?2. Actingselfishlya. Demonstrating ethical behaviourb. Communicating with othersc. Being open mindedd.

Which one of the following is not a component of Cargill’s Leadership Model?3. Ability to learna. Ability to executeb. Ability to memorisec. People’s behaviourd.

The ______________ are a mixture of skills, attitudes and knowledge sets.4. management skillsa. leadership skillsb. reflectiveabilitiesc. reflexiveabilitiesd.

Whichisthesecondreflexiveability?5. Managing riska. Systematic thinkingb. Balancing local and global perspectivesc. Embracing diversityd.

Emotional awareness is the ability to use the __________ side of the brain in decision making.6. right handa. left handb. centralc. frontald.

Treating suppliers fairly is which attribute of responsible leadership integrity?7. Care for Peoplea. Demonstrating a long-term perspectiveb. Managing responsibly outside the organisationc. Communicationsd.

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Where does a consenting relationship lie? 8. Both co-exist with neither the dominant nor the sub-culturea. Both do not co-exist with neither the dominant nor the sub-culture b. The sub-culture is allowed to continue only as long as it does not seriously challenge the dominant c. culture.The sub-culture is tolerated in order to serve the broader purposes of the dominant culture.d.

ThemeaningfulDialogueandLanguageisthe_______areaofinterestinthereflexiveabilities.9. balancing local and global perspectivesa. meaningful dialogue and languageb. embracing diversityc. managing riskd.

Which of the following is not a type of attitude?10. Emotional intelligencea. Open-mindednessb. Conviction and couragec. Honest and integrityd.


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Chapter VIII

Consumer Behaviour Theory: Approaches and Models

Aim


explain the concept of consumer behaviour & consumer decision making •

elucidate the concept of approaches to the study of consumer behaviour•

explicate the models of consumer behaviour•

Objectives


explain consumer decision making•

elucidate cognitive models of consumer behaviour•

enlist characteristic features of approaches to the study of consumer behaviour•

Learning outcome


enlist various approaches to consumer behaviour•

describe analytical and perspective model of consumer behaviour•

understand consumer decision process•

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8.1 Consumer Behaviour and Consumer Decision Making Consumer decision making has long been of interest to researchers. Beginning about 300 years ago early economists, led by Nicholas Bernoulli, John von Neumann and Oskar Morgenstern, started to examine the basis of consumer decision making. This early work approached the topic from an economic perspective, and focused solely on the act of purchase. The most prevalent model from this perspective is ‘Utility Theory’ which proposes that consumers make choices based on the expected outcomes of their decisions. Consumers are viewed as rational decision makers who are only concerned with self interest.

Where utility theory views the consumer as a ‘rational economic man’, contemporary research on Consumer Behaviour considers awide rangeof factors influencing the consumer, and acknowledges a broad rangeof consumptionactivities beyond purchasing. These activities commonly include; need recognition, information search, evaluation ofalternatives, thebuildingofpurchaseintention,andtheactofpurchasing,consumptionandfinallydisposal.This more complete view of consumer behaviour has evolved through a number of discernable stages over the past century in light of new research methodologies and paradigmatic approaches being adopted.

While this evolution has been continuous, it is only since the 1950’s that the notion of consumer behaviour has responded to the conception and growth of modern marketing to encompass the more holistic range of activities that impactupontheconsumerdecision.Thisisevidentincontemporarydefinitionsofconsumerbehaviour:

“Consumerbehaviouristhestudyoftheprocessesinvolvedwhenindividualsorgroupsselect,purchase,useordispose of products, services, ideas or experiences to satisfy needs and desires.

(SchiffmanANDKanuk2007)takeasimilarapproachindefiningconsumerbehaviour:

“Thebehaviourthatconsumersdisplayinsearchingfor,purchasing,using,evaluating,anddisposingofproductsandservicesthattheyexpectwillsatisfytheirneeds”.

Whilemostcontemporarydefinitionsofconsumerbehaviouraresimilar inscope,will identifyanddiscuss thediffering psychological approaches that have been applied to research in this area.

8.2 Theoretical Approaches to the Study of Consumer Behaviour A number of different approaches have been adopted in the study of decision making, drawing on differing traditions of psychology.Writers suggest different typological classifications of theseworkswithfivemajor approachesemerging.Eachofthesefiveapproachespositalternatemodelsofman,andemphasisetheneedtoexaminequitedifferentvariables;theywillbrieflybeintroducedinturn.

Economic Man •Psychodynamic •Behaviourist •Cognitive •Humanistic•

8.2.1 Economic Man Early research regarded man as entirely rational and self interested, making decisions based upon the ability to maximise utility whilst expending the minimum effort. While work in this area began around 300 years ago, the term‘economicman’wasfirstusedinthelate19th century at the start of more sustained research in the area.

In order to behave rationally in the economic sense, as this approach suggests, a consumer would have to be aware of all the available consumption options, be capable of correctly rating each alternative and be available to select the optimum course of action. These steps are no longer seen to be a realistic account of human decision making, as consumers rarely have adequate information, motivation or time to make such a ‘perfect’ decision and are often acteduponbylessrationalinfluencessuchassocialrelationshipsandvalues.Furthermore,individualsareoftendescribedasseekingsatisfactoryratherthanoptimumchoices,ashighlightedbyHerbertSimonsSatisficingTheory,or Kahneman and Tversky’s Prospect Theory which embrace bounded rationality.


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8.2.2 Psychodynamic Approach The psychodynamic tradition within psychology is widely attributed to the work of Sigmund Freud (1856-1939). Thisviewpositsthatbehaviourissubjecttobiologicalinfluencethrough‘instinctiveforces’or‘drives’whichactoutsideofconsciousthought.WhileFreudidentifiedthreefacetsofthepsyche,namelytheId,theEgoandtheSuperego,othertheoristsworkingwithinthistradition,mostnotablyJungidentifieddifferentdrives

The key tenet of the psychodynamic approach is that behaviour is determined by biological drives, rather than individual cognition, or environmental stimuli.

8.2.3 Behaviourist Approach In 1920 John B. Watson published a landmark study into behaviour which became known as ‘Little Albert’. This study involved teaching a small child (Albert) to fear otherwise benign objects through repeated pairing with loud noises. The study proved that behaviour can be learned by external events and thus largely discredited the Psychodynamic approach that was predominant at the time.

Essentially Behaviourism is a family of philosophies stating that behaviour is explained by external events, and that all things that organisms do, including actions, thoughts and feelings can be regarded as behaviours. The causation ofbehaviourisattributedtofactorsexternaltotheindividual.Themostinfluentialproponentsofthebehaviouralapproach were Ivan Pavlov (1849-1936) who investigated classical conditioning, John Watson (1878-1958) who rejected introspective methods and Burrhus Skinner (1904-1990) who developed operant conditioning. Each of these developments relied heavily on logical positivism purporting that objective and empirical methods used in the physical sciences can be applied to the study of consumer behaviour.

There are a number of branches of research that conform to the major tenets of behaviourism, but differ subtly in other ways. Initially ‘Classical Behaviourism’, established by John Watson, required the entirely objective study of behaviour, with no mental life or internal states being accepted. Human thoughts were regarded by Watson as ‘covert’ speech, and strict monism was adhered to. Between 1930 and 1950 Skinner founded ‘Radical Behaviourism’ which acknowledges the existence of feelings, states of mind and introspection, and however still regards these factors as epiphenomenal. The assumed role of internal processes continued to evolve in subsequent decades, leading to more cognitive approaches with a new branch of study ‘Cognitive Behaviourism’ claiming that intrapersonal cognitive events and processes are causative and the primary irreducible determinants of overt behaviour.

While behavioural research still contributes to our understanding of human behaviour, it is now widely recognised as being only part of any possible full explanation (Stewart 1994). Behaviorism does not appear too adequately account for the great diversity of response generated by a population exposed to similar, or even near identical stimuli.

8.2.4 Cognitive Approach In stark contrast to the foundations of Classical Behaviourism, the cognitive approach ascribes observed action (behaviour) to intrapersonal cognition. The individual is viewed as an ‘information processor’. This intrapersonal causation clearly challenges the explicative power of environmental variables suggested in Behavioural approaches, howeveraninfluentialroleoftheenvironmentandsocialexperienceisacknowledged,withconsumersactivelyseeking and receiving environmental and social stimuli as informational inputs aiding internal decision making.

The Cognitive approach is derived in a large part from Cognitive Psychology which can trace its roots back to early philosopherssuchasSocrateswhowasinterestedintheoriginsofknowledge,Aristotlewhoproposedthefirsttheory of memory and Descartes who explored how knowledge is represented mentally in his Meditations. It was not until the middle of the 21st Century however, that Cognitive Psychology truly emerged as a mainstream and useful fieldofstudywiththedevelopmentoftheStimulus-Organism-ResponsemodelbyHebbduringthe1950’sandthepublication of the landmark text by Ulric Neisser in 1967. From this point many writers suggested that Cognitivism had taken over from Behaviourism as the dominant paradigmatic approach to decision research.

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Stimulus Organism Response

Fig. 8.1 Stimulus-organism-response model of decision making(Source: http://eprints.bournemouth.ac.uk/10107/1/Consumer_Behaviour_Theory_-

_Approaches_%26_Models.pdf)

While there are distinct branches of cognitive psychology, they all share an abiding interest in exploring and understanding the mental structures and processes which mediate between stimulus and response. Contemporary CognitivePsychologyhasidentifiedanddevelopedawiderangeoffactorswhicharethoughtfundamentaltotheseintrapersonal processes including: perception, learning, memory, thinking, emotion and motivation. While this is far from a complete list of the possible constructs at play, it does serve to outline the complexity and multiplicity of issues inherent with this approach.

Early Stimulus-Organism-Response models (as depicted in Fig. 8.1) suggest a linear relationship between the three stages with environmental and social stimuli acting as external antecedents to the organism. This approach assumes that stimuli act upon an inactive and unprepared organism. Most modern theorists now, however, acknowledge thatinformationprocessingisconductedbyanactiveorganismwhosepastexperiencewillinfluencenotonlytheprocessing of such information but even what information is sought and received. Information processing will be both stimulus driven and concept driven. This development has resulted in more recent depictions of consumer decision making being circular in fashion, or drawn through a Venn diagram.

DespitecomingfromaRadicalBehaviouralperspective,identifiesfourkeystrengthsofcognitivismasameansofexplaining consumer behaviour:

Its closeness to the common-sense explanations of everyday discourse make it an intuitively attractive means •of offering explanations of everyday behaviours such as purchasing and consuming; The ability of consumers to describe their experiences in terms of their attitudes, wants, needs and motives •ensures that an explanation proceeds in the same terms as the description of what is explained; Itbringsameasureofunityandconsensustoastillyoungfieldofinquiry;•The extensive use made by other social science and humanity disciplines of cognitive explanation has assisted •the conceptual development of this line of consumer research by making possible the borrowing of theoretical and methodological inputs.

Furthermore,Cognitivismhas thecapacity to explaincomplexbehaviours, anacknowledgeddeficiencyof thecompeting behavioural perspective where it is impossible to ascertain the contingencies that control response. However, the cognitive approach is also criticised for a number of reasons. Foxall comments that the cognitive approach“reliesextensivelyupontheuseofabstractandunobservableexplanatoryvariableswhichseldomproveamenabletoempiricalinvestigationandevaluation”.Additionally,cognitivismassumestheconsumerisrational,discerning, logical and active in decision making; assumptions that have been questioned by a number of writers Despite these criticisms, a cognitive approach is more appropriate in the examination of ethical purchasing behaviour. Firstly, the complexity of such actions cannot be accommodated through behavioural models and secondly, the benefitsofethicalconsumptionarelargelyvicariousinnature,requiringextensiveintrapersonalevaluation.Keyexisting studies into ethical purchasing have all accepted the role of intrapersonal examination.


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8.3 Cognitive Models of Consumer Behaviour Two major types of Cognitive models can be discerned, as outlined in Fig. 8.2 below. Firstly, analytical models which provide a framework of the key elements that are purported to explain the behaviour of consumers. These modelsidentifyaplethoraofinfluencingfactors,andintimatethebroadrelationshipsbetweenfactorsinconsumerdecisionmaking.Duetotheirwiderangingscopesuchmodelsareoftenlabelledthe“grandmodels”.Typicallytheytendtofollowthetraditionalfivestepclassificationoutliningproblemrecognition,informationsearch,alternativeevaluation, and choice and outcome evaluation as the key stages in consumer decision processes. The Theory of Buyer Behaviour and the Consumer Decision Model are two of the most widely cited analytical models. Secondly, prescriptive models“provideguidelinesorframeworkstoorganisehowconsumerbehaviourisstructured”.Thesemodels include the order in which elements should appear and prescribe the effect that should be observed given certain causal factors. As such they promise to be useful to practitioners who can ‘measure’ what stimuli should be modifiedoremphasisedtoattractacertainconsumerresponse.Themostwidelyreferencedandusedprescriptivemodels are the Theory of Reasoned Action and the Theory of Planned Behaviour

Cognitive Consumer Behaviour Models

Analytic Prescriptive

Consumer Decision

Model

Theory of Buyer

Behaviour

Theory of Reasoned

Action

Theory of Planned

Behaviour

Fig. 8.2 Cognitive consumer behaviour models(Source: http://eprints.bournemouth.ac.uk/10107/1/Consumer_Behaviour_Theory_-_Approaches_

%26_Models.pdf)

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Summary The most prevalent model from this perspective is ‘Utility Theory’ which proposes that consumers make choices •based on the expected outcomes of their decisions.Consumers are viewed as rational decision makers who are only concerned with self interest.•Consumer behaviour is the study of the processes involved when individuals or groups select, purchase, use or •dispose of products, services, ideas or experiences to satisfy needs and desires.Essentially Behaviourism is a family of philosophies stating that behaviour is explained by external events, and •that all things that organisms do, including actions, thoughts and feelings can be regarded as behaviours. Behaviorism does not appear too adequately account for the great diversity of response generated by a population •exposed to similar, or even near identical stimuli.

References2010• , 5 Consumer Behaviour Secrets to Increase Sales and Revenue, [Video Online] Available at: <http://www.youtube.com/watch?v=n38e_Vp3hLQ>[Accessed7November2012].2012, What is Consumer behaviour? [Video Online] Available at: <http://www.youtube.com/watch?v=LI_•WwbgwYfs>[Accessed7November2012].Consumer Behaviour Theory: Approaches and Models• , [pdf] Available at: < http://eprints.bournemouth.ac.uk/10107/1/Consumer_Behaviour_Theory_-_Approaches_%26_Models.pdf> [Accessed 7November2012].2012, Consumer Behaviour[Online]• Available at: <http://www.scribd.com/doc/47890446/10/APPROACHES-TO-THE-STUDY-OF-CONSUMER-BEHAVIOUR>[Accessed7November2012].Noel, H., 2009. • Basics Marketing 01: Consumer Behaviour, AVA Publishing.Tyagi. C. & Kumar. A., 2004. • Consumer Behaviour, Atlantic Publishers & Dist.

Recommended ReadingNaik, K. C.N., 1999. • Consumer Behaviour, Discovery Publishing House.Wright, M., East. R. & Vanhuele, M., 2008. • Consumer Behaviour: Applications in Marketing, SAGE.Khan, M., 2007. • Consumer Behaviour, New Age International.


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Self Assessment____________ proposes that consumers make choices based on the expected outcomes of their decisions. 1.

Utility theorya. Consumer theoryb. Product theoryc. Behaviour theoryd.

__________ are viewed as rational decision makers who are only concerned with self interest. 2. Buyera. Sellerb. Consumersc. Employerd.

________________ considers a broad range of consumption activities beyond purchasing which commonly 3. include need recognition, information search, and evaluation of alternatives, the building of purchase intention, andtheactofpurchasing,consumptionandfinallydisposal.

Consumer behavioura. Buyer behaviourb. Seller behaviourc. Employee behaviourd.

______________ is the study of the processes involved when individuals or groups select, purchase, use or 4. dispose of products, services, ideas or experiences to satisfy needs and desires.

Consumerisma. Economicsb. Consumer behaviourc. Behaviourismd.

In _______________ the individual is viewed as an ‘information processor’.5. Psychodynamic approach a. Cognitive approachb. Behaviourist approach c. Humanistic approachd.

Consumers do not have adequate information, motivation or time to make decisions and hence their decisions 6. areacteduponbylessrationalinfluencessuchas________________

social relationships and values. a. time and money b. family and relativesc. care and love. d.

The key tenet of the _______________ is that behaviour is determined by biological drives, rather than individual 7. cognition, or environmental stimuli.

Psychodynamic approacha. Cognitive approachb. Behaviourist approach c. Humanistic approachd.

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______________ is a family of philosophies stating that behaviour is explained by external events, and that all 8. things that organisms do, including actions, thoughts and feelings can be regarded as behaviours.

Consumerisma. Behaviourismb. Futurismc. Terrorismd.

In Behaviourist Approach, human thoughts were regarded by Watson as_____________9. Covert speecha. Introvert speechb. Extrovert speechc. Positive speechd.

______________duetotheirwiderangingscope,areoftenlabelledthe“grandmodels”.10. Prescriptive modelsa. Analytical modelsb. Behaviour modelc. Consumerism modeld.


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Case Study I

Consumer Behaviour Case Study: Coke for All

IntroductionThis case study examines how consumer behavior has successfully been used to promote Coca-Cola brand in Thailand while the market share of company has declined. First of all, this case study states a short history of Coca-Cola and explains the problem background of the company regarding in Thailand. Secondly, the analysis of how consumer behaviour theories used to solve the problem will be provided.Finally, there are conclusion and limitations of the case study.

BackgroundToday, Coca-Cola took the top position among the Top 10 Global Brands 2008 for the eighth year in a row (Economic times 2008), since it was created in 1886 by John Pemberton, a pharmacist in Atlanta, United States. In 2003, Coca-Cola became the world’s largest manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups. Now Coca-Cola sells more than 400 brands in 200 countries (Coca-Cola, 2008) and had the highest market share amongst other carbonate drinks in the world by more than 70% of its income outside the United States (Euromonitor, 2008).

For many years that Coca-Cola is known as the world leader in carbonated soft drink especially in Europe and South America. But in some Asia markets including Thailand, Coca-Cola still trail its biggest rival, PepsiCo (Euromonitor, 2008).

Regarding to the loss of business situation in Thailand, although Coca-Cola is a global brand available in most countries in the world, sharing strategic principles, positioning, marketing including carrying the same brand name or logo (Mooij, 2005). The company is also recognised by the importance of adaptation/localisation in overseas by responding to each target market’s need and want, focusing more on the market; economy, culture and region (Hollenson, 2007). Moreover, Coca-Cola tries to approach the target consumers by decentralising the operation and marketing, trusting more on the ideas and decisions made by individual local company not from its Atlanta head quarter(NewYorkTimes,2000).ThesearethewaystoreacheverytargetconsumerintheworldasthemantraofCEO and Chairman of the company, Doug Daft in 2000 said:

“Tobewithinanarm’ssearchofdesire.....Always,everywhereCoca-Cola”•“thinklocal,actlocal”•“peopledon’tbuydrinksglobally”•“Weneedtomakeouradvertisingasrelevantaspossibletolocalmarkets”•

With mixing these two components (global brand and localisation), Coca-Cola is still found to lose connection withThaiconsumers,accordingtoSasieVadhanapanich,achiefideationofficerofamarketingresearchcompanyin Thailand acknowledged Thai’s perception for Coca-Cola that the brand stands for ‘youthful spirit’, ‘cool’ and ‘hip’. But for many years ago, the company had not excited the market or consumers anymore whether through new product innovations or impactful breakthrough campaigns. Although many attempts were provided to reconnect with young consumer, the impact was so short-lived (Mulchan, 2004).

ThisproblemofCoca-ColainThailandcanbeexplainedintermoftheconflictbetweenbeingglobalbrandandlocalization.ThoughCoca-Colasaidithasappliedadaptation/localisationstrategybuttheiradvertisingcampaignsin Thailand before 2007 still were global advertisings, the company still adapt one global advertising with promote amusements, cool and hip of teenager with Coca-Cola in the term of global brand. This situation is considered as wrong principle and impossible in practice because global advertising can be effective to consumer in global market not to Thailand or other market where consumers’ values and cultures are different from the values and cultures in the advertising campaign (Mooij, 2004), also the consumer’s culture of local country is different from the global brand’s countryoforiginbecauseitislessaffluentworldofmercerizationandglobalismbutmorebecomingcreolized(Belkand Ger, 1996 ). Until 2007, Coca-Cola decided to launch a new advertising campaign named ‘Coke for everyone’

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(figure1.seeappendix)inThailandthatwastotallydifferentandmoresuccessfulthaninthepast,becausethisadvertising is expressed Coca-Cola’s good understanding of Thai hoods through telling simple stories of Thai, using Coca-Cola bottle/can as a person to present their differences since physical body, roles in society, attitudes, values, cultures through the most important aspect, their ‘identities’ in term of self, family, society and nation.

ConclusionAfter ‘Coca-Cola for everyone’ campaign was launch to promote the brand and increase sales in Thailand for a month.ItwasbeenreportedfromBangkokBizweek,a localnewspaper inThailandthat theadvertisementwasaccepted very well from Thai by approaching 80% of the target consumer that led to increasing of national brand preferenceby36.28%(bizweek.com,2007).

The reason that this ‘Coke for all’ become a successful advertisement is because the company consider creating themeaningfulassociations,thestructureinthehumanmindwhereattributesandbenefitedarelinkedwithuserorbrand, tomake theadvertising relevantandhavemeaningful to theconsumers (Mooij,2005) (figure3. seeappendix). Moreover, a lot of self identities of Thai were expressed very obviously and the advertisement contained consumers’feelingsandemotions.Finallyalloftheseaspectswereconsideredrelatedcultureinfluences,themostimportant element.

Overall, this advertisement can be seen as the perfect tool for Coca-Cola in promoting the brand and persuading Thai consumers to drink Coca-Cola, no matter who they are or what they involve with, while Coca-Cola still remain being global brand that can reach local consumers.

LimitationsOne limitation to this case study is there are only two consumer behavior theories been used; self identity and culture dimension in analysis. However, there many other theories which could be looked at when analysing advertising. Another limitation is the fact I am of Thai nationality and I have looked at Coca Cola advertising in Thailand, this could be seen as an subjective view point, where are an objective view point from someone from another country who is able to see both sides without bias, which would be more affective.

(Source: Consumer Behaviour Case Study: Coke for All, [Online] Available at: <http://www.oxbridgewriters.com/essays/marketing/consumer-behaviour-case-study-coke-for-all.php>[Accessed8November2012]).

QuestionsWith mixing which two components, Coca-Cola is still found to lose connection with Thai consumers?1. AnswerWith mixing two components global brand and localisation, Coca-Cola is still found to lose connection with Thai consumers.

What are the limitations of this case study?2. AnswerOne limitation to this case study is there are only two consumer behavior theories been used; self identity and culture dimension in analysis.

For many years Coca-Cola is known as the world leader in carbonated soft drink especially in which 3. countries?AnswerCoca-Cola is known as the world leader in carbonated soft drink especially in Europe and South America


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Case Study II

Study on Consumer Buying Behaviour in Toothpaste Industry a Case Study of Colgate

IntroductionToothpaste industry has grown immensely in the Indian scenario. There is a lot of competition in the industry mainly between two major players Colgate and HLL .The companies are coming up with new schemes as well as products to lure the customers. The usage of toothpaste has grown because of the lifestyle and the way the individuals are living i.e. more awareness about health. Colgate is going ahead with almost 60% of the market share in the industry.

Thetitleoftheprojectwas“studyonconsumerbuyingbehaviorinthetoothpasteindustry”.

Theobjectivesofthestudywereto“Studytheconsumerbuyinghabit”and“tostudythetoothpastebrandstoidentifyimportantparametersforcustomer”.

Thequestionnairemethodologywasadoptedandtheconsumersandthesalesofficerincompanieswerecontactedin order to have their view on toothpaste. The area of the study was restricted to Gurgaon 100 respondents were contacted .The sales managers in two companies were contacted and their views were known in terms of how they were going in the toothpaste segment.

Itwasfoundthatmanyfirmsareinthetoothpastesegment.Soitisahighlycompetitivesegment.Itwasfoundthatfocusaswellascostleadershipwasbeingfollowedbythefirmswhentheyweregoinginthetoothpastesegment.

Thefirmsaremoreandmorefocusingonthepromotionandtheyarespendingalotofmoneyonthisfront.Customersare also becoming demanding now-a-days and it is seen that many attributes are important for the success of a particularbrand.Thefirmsaregoinginfornewlaunches.

It is found that the discounts are important factor. Another important factor is brand image or brand name.

The project provided an opportunity to know about a competitive segment and how consumers behave in that segment. It also provided an insight into the toothpaste industry and the attitude and perception of the consumer in that segment.

Objective of the StudyTo study the Consumer Buying habits in Toothpastes.

To study the various factor and identify important parameters for customer acceptance

To plot popular Toothpastes Brands on the perceptual maps.

Scope of the Study:(1)Identificationofgapsinpositioningstances.(2)IdentificationofconsumerperceptionsandattitudesregardingOralhygiene.

ConclusionsThetoothpasteindustryisgoingtobemorecompetitiveinthenearfuture.Theprofitmarginisgoingdownoverthe year and going to be continuing for the future also. So the main mantra for the companies to be successful is to satisfy the consumers and develop brand image and brand loyalty amongst them.

So it has become very necessary for the consumers to understand the Indian consumers very well. So in the future the companies who come up with new products at competitive prices and with good quality are going to the successful one. Promotional activities are also going to play an important role that should to be for both retailers and consumers.

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So we are going to see a market which is going to heat up in the near future where mainly two major players Colgate andHLLwillfightthewar.

SuggestionsThe companies should give more emphasis on advertising and sales promotion as the competition is becoming tougher and tougher. So they need to make some brand image amongst the consumers.

The customers are becoming king as they have a whole lot of choices. So the companies should try to be cost effective and pass on the saved amount to the customer.

Retailers are still the place to buy toothpaste. So the companies should focus on retailers also who is also a customer for their products.

The companies should try to launch new products after through research of the consumers as they are becoming more dynamic day by day.

LimitationsThe responses can be biased, as some of the respondents may not have revealed the true pictures.

Thecompanyofficialsalsotootendtogivebiasedanswers,astheyalwayswanttogivearosypictureoftheircompany.

The managers were reluctant to give information about the product.

The sample was restricted to the Gurgaon region only.

(Source: Study on consumer buying behaviour in toothpaste industry a case study of colgate, [Online] Available at: <http://www.skylinecollege.com/blog/consumer-behavior-study/study-on-consumer-buying-behaviour-in-toothpaste-industry-a-case-study-of-colgate>[Accessed8November2012]).

Questions Why the usage of tooth paste has grown?1. What is the objective of the study?2. Which are the activities going to play an important role that should be for both retailers and consumers?3.


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Case Study III

Establishing a New Hotel

The marketer has to learn about the needs and changing of the consumer behaviour and practice the Marketing Concept. Levi strauss & Co. were selling jeans to a mass market and did not bother about segmenting the market till their sales went down.

The study into consumer behaviour showed their greatest market of the baby boomers had outgrown and their NEEDs had changed. They therefore came out with Khaki or dockers to different segments and comfortable action stocks for theconsumersinthe50agegroup.Thusbyseparatingthemarketandtargetingvariousgroupsandfulfillingtheirneeds, they not only made up for the lost sales but far exceeded the previous sales. They also targeted the women consumers for jeans and both men and women started wearing jeans in greater numbers. The offering given by the company must be enlarged to suit various segments.

For example Maruti Udyog Ltd has come out with many models. Maruti 800,

Maruti Van, Zen, Alto, Veagon R, Versa Gypsy, Esteem, Boleno and other models.For successful marketing one should:•Find consumer needs of various segments.•Position Products (new & existing) to these segments.•

Develop strategies for these segments. Practice greater selectivity in advertising and personal selling and creating more selective media and distribution outlets.

Establishing a New HotelA three star hotel located in Delhi has been experiencing a decline in its occupancy during the past one-year. The management has recently reviewed the problem and is seriously considering to attract business executives as also to provide adequate facilities for holding business conferences, workshops etc. Since this would involve some renovation of the existing building in addition to new furniture and equipment, the management wants to be cautious in undertaking such expenditure. Since its inception several years ago, the hotel has been maintaining a complete recordofitsguests.Whenapersonvisitsthehotelforthefirsttime,detailssuchashisname,age,sex,permanentaddress,purposeof‘visitanddurationofstayalongwithdatesareenteredonacard.Theguestfilehasexpandedtremendously containing over 8,000 cards. The management wants to make use of this readily available information along with any additional information necessary in this regard.

(Source: Establishing a New Hotel, [Online] Available at: <http://www.unipune.ac.in/Syllabi_PDF/revised_2009/com/Case%20Studies%20Advanced%20Marketing.pdf>[Accessed8November2012]).

QuestionsSpecify the statistical universe implicit in the management’s choice of the sample.1.

Ifasampleistobedrawnfromtheguestfile,describetheprocedureyouwouldadoptineachofthefollowing2. sample designs.

Simple random sampling.a. Systematic random sampling.b. Stratifiedrandomsampling.c. Cluster sampling.d.

Which one of the sample designs would you select and why?3.

Specify the nature of data that you would collect from the sample respondents?4.

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Self Assessment Answers

Chapter Ib1. a2. b3. b4. b5. b6. c7. a8. b9. c10.

Chapter IIa1. a2. b3. a4. a5. a6. b7. b8. b9. b10.

Chapter IIIa1. b 2. a3. d4. c5. d6. a7. b8. a9. a10.

Chapter IV b1. a2. d3. c4. a5. a6. d7. b8. a9. a10.

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Chapter Vb1. a2. a3. a4. b5. c6. b7. d8. b9. b10.

Chapter VIb1. a2. b3. b4. c5. c6. b7. b8. c9. c10.

Chapter VIIb1. a2. c3. d4. d5. a6. c7. d8. b9. a10.

Chapter VIIIa1. c2. a3. c4. b5. a6. a7. b8. a9. b10.

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